Owning a home is something that many people dream about, but making that dream a reality takes time and knowledge. There are many factors to consider when determining if you’re ready to purchase your first home. Here are four things that should be checked off your list before you start looking at homes.
Established a Good Credit Score
Your credit score is a very important factor when it comes to qualifying for a mortgage. Most lenders require a credit score of at least 580, with some loans having a higher credit score requirement of 620 or above. To establish a good credit score, pay all your bills on time and don’t have a lot of excess debt weighing you down.
Save up for a down Payment
A down payment is almost always required when purchasing a home. Aside from some loans, like a USDA loan, a down payment is a necessity. Although you can ask for seller’s concessions which can assist with a down payment and closing costs, the competitive housing market can make this a difficult thing to negotiate. You’ll want to have between 5% and 15% of the purchase price of the home saved up for a down payment. In order to eliminate the private mortgage insurance (PMI), you’ll need to put at least 20% down.
Budget in Utilities and Maintenance
Owning a home comes with its fair share of extra costs. Things like utilities and maintenance on the home can really add up. If you factor in unexpected repairs, you can quickly end up over your head if you’re not prepared for the extra expenses. Sit down and figure out a realistic budget before setting a price range for your home search. This will help ensure you’re not looking at homes you can’t afford.
Research the Market
The housing market is very competitive right now. Many houses are selling quickly and for over asking price. Hiring the right real estate agent can help ease the burden of the home buying process. They can hold your hand every step of the way to ensure you’re getting the best house at the best price.
The home buying process can seem overwhelming, but surrounding yourself with the right real estate agent, lender, and legal counsel can make the process go much smoother. Achieving the dream of owning a home is within your reach if you fully prepare yourself ahead of time.