A lot of first time home buyers really don’t know the process. It isn’t made any easier that this whole process is kept like it’s the deepest of conspiracy secrets. How to buy a home? Ask anyone and they’ll say, we’ll have a down payment and then call a realtor.
They don’t say anything about the before or after of that process. How do I know how much to save? When do you know you’re ready to call a realtor?
There are too many questions and I don’t know about you but I felt like if I contacted a realtor I’d be hounded for weeks. I felt, and found that I’m not alone here, that realtors were the spiffed up version of that bad image you get for 1990’s used car salesmen.
Or women, but that was the vibe I got and it really put me off on getting started. What we have here is a list of what first time home buyers should be aware of and how you can prepare.
Don’t Get In Over Your Head!
See a lender first! A lender won’t lie on the pressure but they may have a small fee, usually this is caught in the closing costs section of the process. But, if you’re not ready to move on to your next step of contacting a real estate agent and start looking a lender can tell you that.
Another acclaimed formula in figuring out how to not bury yourself in a mortgage that you’ll refinance in five years is the twenty-five percent option. Take your total income (combined if you are working with more than one income) and multiply that by .25 then divide that by 12; now you have what you can afford on a monthly mortgage payment.
It’s discouraging, or it was for me, but there are other aspects to take into account. First home owners insurance, second home warranty, and finally unexpected repairs.
Programs Are Available, Don’t Miss Out…
Many, many, many states, some counties and rarely cities have tons of programs for first time home buyers. This is usually for down payment assistance and has terms and conditions that applying to the loan. Be aware of the terms but more often than not they are more than reasonable.
With these programs for down payment assistance it makes buying a home reasonable without having twenty percent of a mortgage hanging out in your savings account.
Take into consideration how this will affect your loans and be sure to ask your lender what programs would be able to be used. Program for down payment assistance are often income based and can set a limit on what your mortgage can be in total.
What’s Ideal, and what’s Feasible
Most importantly, understand if you’ve building up for your dream home or if you’re looking for a starter. Obviously the dream home is always the ideal but have a realistic understanding of what you may end up looking at.
It’s perfectly okay to walk into a home and not be enthused, but if you’re finding this happens in every home in your price bracket you might want you reevaluate what you’re trying to get into.