Buying your first home is an exciting time in life. The hope of building new memories with friends and family members as you all grow older makes the dream of owning a home part of everyone’s plans for the future.
Don’t get too hasty with your dreams, though. Buying a home takes a while, and you are likely not ready to start the legal process. Take a few minutes to educate yourself, and check out a brief overview of a few personal finance tips to consider before purchasing your first home.
Take a good look at your credit report
Your credit score can take you far, or it can really drag you down. You want to figure that out before you start trying to apply for a mortgage loan. The lender’s office is not the place where you want to find out you have poor credit.
Do the research and footwork it takes to prepare your credit before you go see the mortgage lender. Do a thorough check of your report, and clear up any stains that may be keeping your score down.
Start saving for your down payment
It’s never too soon to start saving for the down payment on your first home. You will likely need between 10-20 percent of the cost of the property as a down payment to secure ownership. Depending on the price of your dream home, that could amount to a pretty penny.
Consider what you can really afford
You need a firm grasp on just how much you can comfortably afford to pay each month for a mortgage payment. While you’re saving for your down payment, you will be able to get a good feel for what you can really afford to throw back each month.
Use the time you have while you’re saving for your down payment to reign in any bad spending habits or holes in your budgeting abilities. You’ll need to be able to make good financial decisions to keep up the property once it is in your possession.
Consider where you can afford a home
You may already have a number in mind for the total price of your new home, but that doesn’t set the standard for how much home you can afford. The price of your home can vary widely, depending on its location.
For instance, if you are looking to purchase a home in Scottsdale, Arizona, you’ll pay close to half a million for a single family home. If you move your pointer on the map a bit, you’ll find that homes for sale in Phoenix average only half of that total.
Try looking a little outside of your targeted area, if you find that home prices are a bit out of your range. You can also purchase more square footage for your dollar by going a little outside of most main cities.
