You’ve been out of college for a few years and you finally have enough money saved for a down payment. Are you ready to buy a house? Purchasing a home is one of the biggest purchases you’ll ever make, if not the biggest. High-involvement purchases require a lot of prep work and research prior to, and a decent amount of upkeep following. Here is our quick guide to home ownership to help get you on the right path.
Gauge a Potential Budget
Evaluate your income and expenses and utilize online mortgage calculators to estimate the costs of buying versus renting. It’s important to overestimate when valuing expenses—we all know life has its financial surprises and you want to make sure you have the funds to cover those. Keep an eye on your credit score to make sure you’re in a good position to get a loan.
Start Researching Early
If you think you’re going to be ready to buy a house within the next year, start researching the area to better understand cost of living. There are a lot of factors that come into play including local real estate, neighborhood, school district, square footage, upgrades, features, amenities ... and those are only a few. Make sure you’re looking at houses within your budget. You’d hate to find the house of your dreams only to find out it’s $20,000 too much.
Create a List
After you’ve done some research, you’ve likely determined a few must-haves and probably even some must-nots. Put a list together that lays out what you’d like to have in your first house—and be realistic. For instance, you probably don’t need 2,800 square feet of living space for you and your dog. Remember, the chances of you being able to afford your dream home the first time around are slim. Look for what you need, not what you want. After all, home ownership comes with sacrifice.
Many first-time homebuyers confuse this step with the process of “pre-qualification.” Although they are similar, pre-qualification tends to be an informal process. This is the initial step involved in the mortgage process where a lender estimates an amount you can borrow. Pre-approval is the next step, where the lender checks your credit and verifies information including your financial stability and employment. When pre-approved, you’ll be given a specific loan amount that you qualify for. This pre-approval amount is usually valid for a particular period, such as 90 days.
Find a Real Estate Agent
Once you’re pre-approved, it’s time to find a real estate agent. These are the experts in the home-buying and selling industry. They’ll know how to find houses with features that align with your wish list, negotiate pricing, and keep you updated on market trends.
Prep Your Paperwork
When purchasing a house, there is no shortage of paperwork involved. From employment paperwork and tax returns to bank statements—you’ll be tracking down a plethora of information. Prep that paperwork beforehand so when you’re ready to put an offer in, the logistics don’t hold you up. Download our Mortgage Paperwork Checklist to make sure you don’t forget anything!Purchasing your first house is a wonderful accomplishment, but it’s important not to rush the process. Start looking at a potential budget, researching early, and find a real estate agent you can trust to help you along the way. Speak with a mortgage expert at iQ Credit Union for more information. You’re on your way to home ownership, we’ll help get you there!