However, we have some other tips for preparing to buy your first home that you’ll want to keep in mind.
Pay Off Debt
When you start to apply for home loans, lenders will consult your credit report to see how you are with finances. If you can, pay your debts down before applying for anything; it will benefit you to have more unused credit.
Above all else, lenders want to see that your payments are on time, that your credit utilization is low, and that you are trustworthy with money.
Build Emergency Fund
Putting money aside for emergency purposes is an essential step in financial responsibility. Paying your debts down is important, but it’s equally as crucial to have money available for anything that comes up that could cause you financial hardship.
Your emergency fund should be something separate from the money you use to pay your bills and make purchases, and you should only use it in the event of (you guessed it) an emergency.
Once you own a home, you have no idea what problems will pop up, and a furnace breaking in the middle of winter or a leaking water heater are things that you’ll need to deal with immediately.
Make a Financial Checklist
Preparing to buy a home means making a financial checklist that will help you plan for the funds you have and the funds you need. This process will involve determining a house budget and thinking realistically about what you can afford—allowing for unexpected and living expenses.
Additionally, you’ll need to save for a down payment and closing costs. Creating a checklist will help you ensure that you’ve accounted for the expenses to maintain your lifestyle.
Once your finances are in order and you know your price range, you can start researching neighborhoods. Realistically, you could have been doing this all along; however, the more sensible approach is to understand where your financial limits lie and spend your time focusing on properties that meet your physical needs while staying within your budget.
You may be able to find a home that is great and in an up-and-coming area. By going this route, if you choose to sell later, your property may have appreciated.
Additionally, you’ll want to make sure that the area aligns with your way of living. Look for a community in the same stage of life as you are.
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You’ll want to decide what you would like nearby, such as a school, grocery store, or mall. The surrounding homes are full of potential neighbors. Be sure you like the area.
Taking the time to work through these tips for preparing to buy your first home will help you focus your search based on what is available to you.
This is an exciting time; you don’t want to let yourself down by choosing something that isn’t quite attainable. Set your sites appropriately, and remember—this is your first house, so celebrate the occasion!
Image Credit: tips for preparing to buy your first home by envato.com
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