How to Prepare to Buy Your First Home
Tim King, President
North Coast Building Industry Association – NCBIA (www.ncbia.com)
Buying a home is an investment in time and money. For many people, a home is the largest purchase they will make in their lifetime. The process can seem intimidating for first-time home buyers, given the many steps involved in the transaction. With adequate research and preparation, the journey towards purchasing a new home can be a relatively smooth one. To help your home-buying process become more manageable, you’ll need to take a deep dive into your finances and prioritize your home amenity preferences. Here are a few steps to help you get started.
Determine What You Can Afford
The best place to start is to figure out what monthly payment will fit your budget. Experts say your monthly home expenses should not exceed one-third of your gross monthly income. Your mortgage payment is only part of your monthly expenses. Property taxes, home insurance, and interest should also be factored into your monthly payment.
Check Your Credit Score
Most people will choose to finance their home, so checking your credit score is another important first step. Your credit score will help you determine the financing options available. Lenders use credit scores to determine if a borrower has a record of on-time payments and to gauge the likelihood of repaying the mortgage. Your credit score will also impact your mortgage terms. The higher the score, the more financing options and lower interest rates will be available to you. Borrowers with scores in the low 600s and even high 500s can still find lenders who will qualify them, but borrowers should strive for scores in the mid- to upper 700s to land the best rate.
Make a list of Your Priorities
As a first-time home buyer, you’ll need to determine a list of your “must-haves” for your new home. Do you need space for a home office or more rooms for your growing family? You should have a general idea of the size, location, and amenities you want in your home. Figure out what feature you are willing to compromise to ensure your home fits your budget.
Shop for a Mortgage
First, research mortgage rates at various lenders online. Shop around to find the lowest rate or work with a mortgage lender to help you find all the loan options available. There are several types of mortgages available, including FHA, conventional, adjustable rate, and fixed rate. You’ll need to learn more about them to figure out which option works best for you. There are a variety of mortgages available for first-time home buyers as well.
To find a new home or for more home-buying advice, contact the NCBIA.
We are your local not-for-profit trade association representing member companies involved in all aspects of home building, remodeling, and other aspects of services available to help you in the future as well as more information on the above topic. So, you can see it is for your protection that you use an NCBIA member. If you are unsure that your contractor is a member of the NCBIA or you are looking for a list of NCBIA members, you can visit our website at www.ncbia.com or call 440-934-1090. We also have a job posting board (under the Industry tab).
Our 24/7 Virtual Parade of Homes allows you to look at some of our builders’ new homes and communities on your mobile device or computer at your leisure. You can also see our remodelers as well. We know time is our greatest asset and via our NCBIA Virtual Parade of Homes, we save you time looking for a new home or a community that fits your lifestyle.
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