Life in the 20s or after graduation is all about setting up your career and living in rented houses. As you get older, you realize the importance of having a home that can provide shelter and peace when you most need it. Sometimes, even the thought of buying a new house can be daunting. Often, most of us will begin the process by installing several apps on our cell phones and downloading random pictures of homes.
The truth is, the process of buying your first home must be downright clinical. If you’re not careful, you might end up bogged down by things that don’t matter. However, we’re here to help because we believe that with the proper guidance, it is possible for you to buy a home, even if it is your first time. So, here are some simple yet crucial steps you can follow to make the process easier.
Step #1: Access Your Finances
Ask Yourself Where You Stand Debt Wise
The ability to manage your current debt as well as your new mortgage payment is something that creditors want to be sure of. Before you fill out a mortgage application and start looking for a home, it’s crucial to get your current debt under control. These include your credit card balance, car installments, and student loans. Here are a couple of things you should be doing.
Cards: Reduce your credit card balances so that you are only utilizing 30% of your available credit. In addition to a lower credit score, maxed-out credit cards can indicate to lenders that you are not using your available credit wisely.
Installment loans: If you have any installment loans (such as vehicle loans), you might consider paying them off or considerably reducing their balance to reduce your monthly commitments.
Student loans: If you have debt, consider how the monthly installments may affect your capacity to make mortgage payments. If you pay off any credit card debt, your budget may have more room to support both your school loans and installments
Know Your Budget When Buying Your First Home
It’s crucial to remember that your budget will alter when you buy a home, and you’ll have new expenses in addition to the mortgage payment.
These are just a few extras you’ll need to budget for, along with maintenance and homeowners’ insurance. Your utility bills may rise, and you may have other expenses. To handle unexpected repairs, you also need to make sure you have adequate money in savings.
Lenders often require two months’ worth of reserves in the bank for various types of mortgages (including the mortgage, taxes, and insurance). If your mortgage, taxes, and insurance payments total $4000, you should ideally have $8000 in your account. Even if your creditor doesn’t ask for this, it is best to keep it as a cushion in case you need it.
Determine How Much Down Payment You Can Pay
The kind of mortgage you get will determine how much you’ll put down on the house. The standard mortgage down payment is between 3.5% and 20%.
A creditor or bank will view you as less risky if you make a larger down payment. Lenders assume that buyers who put more money down the front are less likely to lose interest in the equity they have in their home.
It may be beneficial to visit with a mortgage officer to discuss your loan alternatives while you decide how much down payment you want to make.
Step #2: Decide on Your Home
Determine The Location and Your Needs
Once you know your purchasing power, you’ll be more equipped to find a suitable home that fits your budget. The first step you’ll need to take is to know what you need in your home. Here are a couple of things you’ll need to look out for.
Location: Ask any expert agent or investor, and they’ll tell you that the location is the number one feature you should be looking for when picking your home. The area you choose will determine several factors, and security is one of the most important ones.
Amenities: A neighborhood that doesn’t have a grocery store will probably not be helpful when buying your first home. Many new projects in Karachi on installments 2022 have several excellent amenities that families or individuals may need. Opt for one of these so that you know you have access to various important places.
Schools: Finally, if you have a family, you should look for a home near the schools you want to enroll your kids. If your kids are already in school, you should be looking for a home in that preferable locality.
What Kind of a Home Do You Need?
Depending on the number of family members you have or what you’re looking for, you need to decide on the type of home you need. For instance, while single-family homes are ideal for a small family, townhouses or condominiums are the top priority when looking for community or extended family-based houses. You can also opt for fixer-uppers if you can get into the repairs. Before making a decision, you should be aware of each type of house’s several pros and cons.
Step #3: Finalize the Process
Find A Real Estate Agent
It’s time to locate someone to assist you in your search now that you have sorted out your finances and have a clear idea of the type of home you want. The appropriate real estate agent may significantly impact your home-buying experience, from helping you negotiate with a seller to know the ins and outs of the neighborhood market to offer moral support when the search seems never-ending.
Interviewing at least three agents is a smart idea when buying your first home. Find out if people you know who have just purchased a property would recommend their agent by asking them. The only absolute “no” in this situation is to work with the realtor marketing the house you want to purchase. You want your own agency to represent you and engage in negotiations to get a fair deal.
Summing It Up
You should now be able to fill up any information gaps about buying your first home after reading this informative blog. Recall that the less you know going in, the less stressful it will be, and the more likely it is that you will find the home you desire at a price you can afford. At the end of the day, if nothing else, you’ll possess the knowledge to navigate the home-buying process adequately.
