The Ultimate Check List For First Time Homebuyers
The excitement bubbles up inside as you make your dream home list. Everything from the kitchen’s layout to the backyard patio have been perfected in your mind’s eye. But before you jump to decorating the house you long for, there is some leg work that needs to be done and some things to keep in mind at the outset of this house hunting journey. Buying a home is the largest investment of your life, so step lightly and follow this ultimate checklist to avoid snags along the way.
Evaluate Your Credit
Unless you are part of the crowd with hundreds of thousands of dollars worth of cash sitting around, you will need a loan, and a loan means good credit. You are entitled to a free credit report every 12 months from each of the three major credit reporting agencies: TransUnion, Experian, and Equifax. All can be accessed at AnnualCreditReport.com. A good credit score (the 3-digit number that rates your creditworthiness) means better lending options, better interest rates, and a better chance for being approved for a mortgage. Shoot for 620 or above. If you have something lower, then work on getting your credit score higher before you pursue a home. Actions such as paying bills on time, lowering your debts, and keeping cards with a zero balance open will all boost your credit score.
Do you have stable employment? Is your paycheck dependable and steady? Figure out what you can comfortably afford monthly for a home mortgage before committing to one. A general rule of thumb is that your mortgage payment shouldn’t exceed 28% of your monthly income. For example, if you bring in $4800 a month, your mortgage payment should be around $1340 or less. There is wiggle room on this number, but it’s a good baseline to follow so that you don’t find yourself with a roof over your head but nothing to eat. You can try using a mortgage calculator, like the one we found on QuickenLoans.com to help crunch the numbers.
Money, of course, is a must have when it comes to home buying. A downpayment is an important variable in this equation, but not as crucial as you may think. Folks without bookoos of cash in hand for a down payment have loan options, such as the FHA loan which requires only 3% down. The downside to not saving up the standard 20% of your home’s price is that you will end up paying PMI, or private mortgage insurance, which tacks right on to your monthly expenses. There are also other costs to consider when homebuying that sometimes get overlooked during the planning process, such as costs for the appraisal, home inspection, and closing fees.
Location and Neighborhood
If this is your first home, consider the location in which you are buying relative to your current life hot spots. Where is your job? Will this house grow with your family? Is it located in a good school district if you plan to have children or already have them? Consider the neighborhood and the sort of lifestyle habits that your neighbors have. This residence may be more permanent than your most recent rental, so your neighbors and the overall atmosphere of the location matter. Typically, home buying is more of a permanent situation than renting because of the costs and time associated with the process.
Keep Yourself in Check
It may sound silly, but many first time home buyers have gotten caught up in the excitement of house hunting and have ended up with lemons. Go into the process level headed and see through the home’s staging to the bones of the house. Never buy a house just for the view, but for the land itself. After all, if you don’t own the view, it could change rather quickly. Understand the life expectancy of major appliances and systems of the home to have a grasp on what to expect while you do your search. For example, the average lifespan of an asphalt roof is around 25 years. The expectancy of a hot water heater is between 8 to 12 years. A properly maintained HVAC unit can live for around 15 years. These will all be things that come straight out of your own pocket when the time comes for repair, so the younger the systems, the better.
This guide is a great jumping off point as you begin the exciting season of first time house hunting. Get your ducks in a row and keep your eyes open and you are sure to have a great experience. The pros at Syler Custom Homes can help you get on your way to building your own custom home, too! Contact us today.