Preparing to buy your first home can be such an exciting time. There are a few things that can cement your status as an adult in the way getting a mortgage can. But at the same time, it can be a scary prospect too. Committing yourself to repay a mortgage is a big thing to do and not something that should be taken on lightly.
Before you sign on the dotted line and take the next step in your adult life, it is essential you have confirmed in your mind that this is the right path for you at this time. But how can you be sure that you are ready financially and mentally to embark on this next journey in your life?
Preparing Yourself for a Mortgage
Can you afford it? Despite having worked hard towards saving for a downpayment on your first home, are your finances in good shape to be able to apply for the kind of mortgage you want to buy your first home?
How is your debt level? It can be a struggle to manage debt repayments and paying off a mortgage. In fact, certain types of debt can restrict your ability to get a mortgage. Have a look at your financial situation and see exactly what you are paying out against what you have coming in.
This is because owning your own home comes with other financial implications such as paying bills, insurances and utilities. If you aren’t currently a homeowner or a renter, this can have a huge impact on what you can realistically afford to pay out of your income each month.
It may be the case that you need to clear your debt before looking at applying for a mortgage or committing to buying your first property. Be it by taking on extra employment, using your savings or using a loan calculator to see what you can afford.
It is essential that you are confident you can afford to do this before making this life-changing agreement. The last thing you want is to realize you made a mistake and you end up struggling to make ends meet or worse, lose your home due to failing to meet your obligations.
A good rule of thumb is to make sure that your mortgage, taxes, and insurance come to around 25-30% of your income.
Apply for a Mortgage
Once you have your finances in order, then it is time to look at finding the right kind of mortgage for you. There are certain criteria you need to meet and limits as to what you will be able to afford to borrow. This is income dependent and takes into consideration the size of the downpayment you are able to make.
Don’t forget: there are other fees you will need to pay upfront so make sure to factor this into your spending as you won’t be able to use your mortgage to cover all associated fees of home buying.
Once you have confirmation in place that your mortgage is approved, then you can move onto the next step in your journey.
Remember: you don’t have to go to the maximum you can afford when it comes to the mortgage amount you have been offered. A mortgage broker can offer you more options if you are struggling to find something that works for you.
Find a Realtor
Looking for your first home can be the best or the worst experience. One way to improve how well this goes for you is to make sure you find the right real estate agent for you. Shop around and get to know all the local agents in your area and see who best meets your needs and can pinpoint exactly what it is you are looking for and is within your budget.
They will be able to keep you up to date with new houses hitting the market, deals that could fall through where you can step in and help you to locate your perfect first home.
A good real estate agent will work with to find your first home and help you negotiate an offer and terms. They can also help you to navigate the paperwork too.
Get a Home Inspection
This is different from a home appraisal. This is also one of the costs we mentioned above you will need to pay for upfront. A home inspection will help you to find any hidden issues with the property that you might not be able to see from viewing. Issues such as mold, damp, foundation problems, termites etc.
Some jobs can cost you thousands so getting a home inspection can alert you to more serious problems that could potentially change your mind about buying. If they don’t they may give you room to negotiate on the price and save you some money to put towards the repairs.
For some people, this isn’t an issue but if you want a home with fewer repairs, then a home inspection is essential.
Be Patient
When you put an offer on a home it goes into escrow. This process can take some time as this is when all the documents are checked to make sure everything is correct and legal. Escrow protects the buyer, the lender and the seller. Be prepared for the escrow holder to take anywhere between three to five weeks to complete.
Move-In
Once your offer has been accepted, escrow has been completed, you are ready to move in. All you need to do is get the keys and prepare for the next part of your life to begin. Whether you move in right away, or you prepare your new home for renovation or decor works, the property is now your and you are finally a homeowner.
Make sure to update your new address details with your bank, mortgage provider, employers, insurances, driving license and so on. Set up your utilities, make a date for cable services to be installed if you wish and start to make this house your home.
