Becoming a homeowner is a big deal and is the entry into adulthood that people crave. The average first time home buyer in the United States is 31 years old. Here are a few things to do before you buy your first home:
1. Assess Your Need
You don’t want to be buying a home just because your friends have started doing it. You need to determine whether it’s better for you to buy or rent at this particular time in your life. Think about if you have plans to marry and have children in the near future, factor in your job – do you plan to stay there long term and is it stable? Make sure you are buying a home because YOU want to and that you are ready for it at this time.
2. Do the Math
Most people focus on just the downpayment when they think about buying a home. It’s true, the downpayment is a large amount of money. But there are additional upfront cost that you need to think about – taxes, insurance and closing costs are some examples. Insurance rates and property taxes will vary by state. Closing costs include many fees – origination, underwriting, appraisal and title insurance. This can all add up to a rather surprisingly large number, so it’s best to get an idea of these costs ahead of time.
3. Be Ready
You will want to have all your documents ready to make the process go smoothly. You will need a government issued ID, a credit report, employment verification, W-2 forms, federal tax returns and bank statements.
4. Check Out the Inventory
This is most likely the largest purchase you will ever make, so be sure to treat it like other large purchases. This means you will want to shop around just as you would for a car, TV or furniture. It may be time consuming, but it’s very important to look at all comparable homes in the area. You can start your search online yourself, or you could call a license real estate agent to help you.
5. It’s OK to Walk Away
Remember – before you make this large of a purchase, you want to be sure you feel OK to committing to a monthly mortgage payment. If you aren’t comfortable with the purchase, it’s ok to leave a near-perfect house for someone else to buy. You keep looking until you find what you are comfortable with.
