Almost everyone gets to a point in their lives where they decide that they want to be homeowners. If you think you’ve gotten to this point, there are a few things to consider first. Just because you are at the point where you want to buy a home for the first time doesn’t mean that you are actually ready. The following are a few things that first time home buyers should consider doing before beginning the home buying process:
- Pay down your debt – If you have any outstanding debts, such as credit card debts, student loan debts or car loan debts, you should think about paying these down first. Paying down your debts will not only help alleviate your financial situation a little bit, making it easier to take on the debt of a home mortgage, but it can also help to improve your credit score. A better credit score can go a long way in helping you obtain a home loan that has more favorable terms, such as a lower interest rate or a lower required down payment.
- Build up your savings – A home loan will help cover the majority of your initial costs, but don’t forget that you have to make a down payment. The down payment on a home can be upwards of 20 percent of the home’s cost. Don’t forget about the other costs associated with buying a new home as well, from the closing costs to the moving costs and more.
- Establish a budget – There’s no point in looking at homes if you can’t afford them. Figure out what you can afford by determining how much you can afford to pay on a mortgage every month. Additionally, keep in mind the general costs of owning and maintaining a home. These costs include property tax, utility costs, general maintenance and repair costs, homeowner’s association costs, homeowner’s insurance costs and more. These are all things that first time home buyers often neglect to consider because they’ve never had to deal with them before.
- Consider the length of your mortgage – You can pay your mortgage off over different time periods. You may be tempted to choose a longer time period, such as a 30-year mortgage. Even though you’ll pay less per month than you would if you took out a 15-year mortgage, keep in mind that you’ll not only be debt for twice as long, but you’ll be paying much more in interest.
- Gather your paperwork – Lenders are going to require a lot of paperwork, so begin gathering your federal income tax records, your recent paycheck stubs, your utility bill payment paperwork, your student loan information and more. Lenders are going to want as much background information on your current and past financial situation as possible.
- Think about where you want to live – Really sit down and go over where it is you want to live before you begin looking. This doesn’t just mean what state or what city. This means how close do you want to be from work? What kind of amenities do you have to have nearby? Do you prefer city life or suburban life? Do you want to live in a good school district? Also consider the future of the neighborhoods you want to live in. Are there plans for commercial building in the neighborhood? Do you care that they plan on building a freeway through your neighborhood within five years?
If you have decided that you want to be a homeowner, then be sure to consider doing these things in order to fully prepare yourself to become a home buyer. Park Avenue Properties of Colorado Springs would be happy to discuss your next steps to home ownership. Start searching for your first home today!