Buying your first home is one of the most exciting days you’ll have in your life. But, making sure you are prepared to take on the responsibility is essential. Here’s some advice and “rules of thumb” to get you started.
Secure your finances
Owning a home can bring unexpected expenses. When you rent, most fixes are up to your landlord. When you own a home, you are responsible for all of the maintenance, so you’ll want to be prepared.
A good rule of thumb is an emergency fund of at least 3 months before purchasing a home.
Determine your monthly budget
Buying a home means having a mortgage, HOA fees, taxes, insurance, and upkeep. Make sure you include all the “extras” – and not just your mortgage when calculating what you can afford.
A good rule of thumb is that you should not spend more than 25% of your monthly take-home pay on housing.
Save a down payment
There are lots of programs available to help first time home buyers, but the more down payment you have, the better.
A good rule of thumb is at least 3.5% down.
Save for closing costs
When you come to closing, you’ll have a variety of costs that include things like appraisal fees, title insurance, and deed recording fees. Don’t forget that you’ll need this money in addition to your down payment. While it’s best to plan on this expense, your REALTOR can help you negotiate these costs.
A good rule of thumb is that you should expect to pay closing costs of 3-4% of the purchase price of your home.
Your REALTOR should connect you with a mortgage lender so that you can get pre-approved. The lender will need to verify your financial information, so you’ll need to show proof of income.
A good rule of thumb is to get pre-approved from one lender, but shop around for the best programs and interest rates.
Find a great REALTOR
A REALTOR can give you advice on neighborhoods, set you up to receive information on listings that fit your criteria as soon as they hit the market, and schedule home showings. They should be a great negotiator and help you through the contract, home inspection and get you to the closing table.
A good rule of thumb is to find a REALTOR that listens and understands the type of home you are looking for. Be sure they are knowledgeable and ready to negotiate to get you the best deal. I love helping first-time buyers navigate the purchase process! To chat about how I can help, you can reach me at 317-908-2599 or firstname.lastname@example.org