How to Prepare for Your First Home Purchase
You’re ready to purchase your first home, but what are the next steps? Here are some tips for first-time buyers. Get Pre-approved for a mortgage and learn about the down payment, closing costs, and neighborhoods. Once you’re ready to buy, the process moves quickly. Fortunately, you can prepare yourself before you begin the search. After all, you don’t want to be blindsided by a loan officer.
If you’re looking to buy a home, you should get preapproval for a mortgage before you look for homes. A preapproval letter confirms that you are financially capable of purchasing a house, but it isn’t a guarantee of the loan. Prequalification involves an interview with a mortgage lender. You’ll be asked about your credit history, monthly income, debts, and other factors. Once the lender determines that you’re a good candidate for a mortgage, they can give you an estimate of what you’ll need in order to buy your first home.
Putting down a down payment on your first home purchase can make the process of purchasing a new home a lot easier. This money is typically used to spread the cost of the home into manageable monthly payments. You can usually pay your down payment with a cashier’s check or wire transfer. When you’re preparing to make your down payment, consider your future needs and the amount of money you can afford to spend.
Depending on the state you are buying a home in, closing costs may vary. In some states, these costs are required by the lending institution, while others are optional. You can use an online calculator to determine your closing costs. The average range of closing costs is two to five percent. Depending on your location, lender, and loan type, you may find that closing costs are higher or lower than expected. If this sounds overwhelming, you can always try to figure out these costs by hand.
Questions to ask yourself before buying a home
Before you begin looking at houses, make a list of all of your needs and wants. Prioritize those first and focus on the others after. For example, you might need a flexible floor plan for aging parents or a home office, or outdoor space for pets. Once you have defined your needs, you can narrow down your list and look for homes that meet those needs. If you have children, consider if the neighborhood is suitable for schooling and childcare.