Owning your own home is a dream of millions. It gives you the satisfaction of owning something which you can call yours. It gives you the security of a roof over your head. But buying your first home is not an easy process.
Buying a home is way more complicated than renting. If you need to rent an apartment, it’s pretty straightforward. You ask your landlord for a rental contract, he writes one up, and you sign, giving him the first month’s rent plus a damage deposit, and you’re good to go.
But when it comes to buying a house, there are many things that you need to know. From your budget to the type of house that you want, there are many things that you need to get nailed down before you even begin looking.
Buying a house depends on the buyer and the seller. And every buyer and seller has their own needs. So it is safe to say that things that work for someone else might not necessarily work for you. At least not right away.
But there are a few steps you need to take in buying your first home. So let’s explore!
7 steps you need to take in buying your first home.
1. Make sure you can afford it
First thing first, make sure you can afford it. There is no specific number that you need to be earning to buy a house. But you need to make sure that your income meets the total cost of homeownership and related living expenses.
A general rule of thumb is to aim for 25-30% of your income going towards housing costs.
Also, don’t forget about the down payment. Some sellers will require that you have a downpayment before you even begin negotiations. The bigger your down payment is, the lower your monthly premiums will be.
Things like your credit score and employment history also play a role in whether or not you can afford it. But if all lines up, congratulations! You are a step closer to buying your very first home!
2. Pick out the area/house you want
Picking out the area you want to buy your house in is just as important as picking out the house itself. You can’t go back and change the location of your home after you’ve already bought it.
So make sure to take some time choosing which area/neighborhood;
- Has the best school district.
- Is close to places that you need (like work).
- And has amenities like shopping centers, grocery stores, etc.
But you can’t ignore the fact that the better the area, the more expensive it will be. You might have to sacrifice a few things for you to get the perfect house in the ideal location. So make sure to take a look at your budget and see if you can afford this area.
3. Find the best payment options that suit your financial situation
There are different types of payment options available when it comes to buying a home. Usually, the payments depend on your financial situation and how much money you have for a downpayment.
let’s take a look at three options;
Option 1: Conventional loan
With this option, there is no down payment required from the borrower. The best thing about this is that you can find a lot of banks offering these types of loans.
The cons of this loan are that you need to have a good credit score and stable employment history. Also, the interest rate for this type of loan is pretty high compared to others.
Option 2: FHA Loan
It has low downpayment and low monthly mortgage insurance. You can also get home improvement loans with this type of loan through the FHA’s 203(k) program.
With this, you can repair or improve your house with a loan and then add that cost to the total amount of your mortgage.
Option 3: VA Loan
This is another excellent option that you have if you are a veteran. With this, the government backs up the loan, so you don’t have to put money down for it. It also helps veterans get loans with better interest rates compared to conventional home loans.
4. Get Pre-Approved for a Mortgage Loan
Once you know the area in which you want to buy the house and how much money you have for a downpayment, it’s time to get pre-approved for a loan. Getting pre-approved allows you to feel more secure about your financial situation.
You will also know what type of home you can afford. This is very important because it will be harder to get a loan approved by the bank if you buy a house before being pre-approved.
5. Start Looking!
Now you’ve done your homework, and it’s time to go out there and look for your dream house! Make a list of what you are looking for in your ideal home. Is it the size? The location? Or maybe it’s an apartment instead?
Make sure to focus on the area you want to live in and look for available homes. You can also visit open houses or ask for advice from someone who has bought a house before. There are also lots of magazines and apps available to help you find your dream house!
6. Ask for a home inspection
When you finally decide to buy a particular house, it’s always best to ask for a home inspection. This is where you hire someone to inspect the house and see what needs repairing or fixing before agreeing to buy it.
If you find a few things here and there during the inspection, you can easily have those things repaired at a low cost. On the other hand, if there are a lot of issues with the house, it’s best to ask for a lower price or back out from buying it.
You don’t want to invest thousands of dollars on a house that you have to spend even more money fixing and repairing.
7. Negotiating the Price and Closing the Deal
The final step is to negotiate the price and close the deal. When you find a house that you like, make sure to make an offer right away. It’s best to go in with a lower price than they are asking for, hoping they will agree on it instead of waiting for another buyer willing to pay more money.
Either way, be prepared to pay more than what they are asking for the house. There will be taxes and fees that go along with buying a house. So it’s best not to close your eyes and hope you’re only paying the price of the house itself.
A few things you should consider before buying your first house
So now you know the steps to buying your first house, but there are still many things to consider before you do so.
- Talk to a real estate agent
- Make sure to have a downpayment
- Do your research!
- Get pre-approved for a mortgage loan
- See if you qualify for grants and benefits
- You have to be realistic about what you can afford
- Hire someone to inspect the house before buying it
- Improve your credit score to get better premium rates
Benefits of having your own house
Having your own house means you have a lot of freedom. You no longer need to rent an apartment or live in someone else’s house. Instead, you can choose where you want to live and what kind of house that will be.
Here are just some of the benefits you will get from having your own house:
>> Owning your house gives you a lot of freedom and flexibility because you can make changes to the home without asking for someone’s permission.
>> Every time you drive up to your house, you get a certain amount of pride because it’s a constant reminder that you made a huge accomplishment.
>> Your kids will feel like they got their playground.
>> You can decorate it however you want with all the furniture and styles you love.
>> It’s cheaper than renting an apartment (in the long run).
>> You are building an investment for your family that you can use later in life.
Bottom-Line
Buying your first house is one of the ultimate goals most people aim for in life. Remember that it takes a lot of time, effort, and money to purchase one, so sit down with your family and plan carefully before jumping into anything.
Once you decide to take the risk, make sure to have an excellent real estate agent by your side the whole way. Finally, be proud of yourself once you get your first house because it is something that not everyone gets to experience!
