Determine why you want to buy
If you have any urge to become a homeowner at some point, think about your reasons for buying. Are you simply tired of paying rent? Are you looking for a long-term investment opportunity? Is home-buying part of your retirement plan? Really explore your motivation for owning a home, as it can direct your path when you eventually begin exploring mortgage options and playing around with different down payments.
Home buying is not typically a spur-of-the-moment decision. If you’re thinking about buying a home in the future, you’re in an ideal position to set yourself up with a plan.
To be in the best possible position to save for and purchase a home, you want to pay down other debts you may already have. Pay off student loans, credit cards, and cars so that you’re in a prime position to save. However you decide to finance your home purchase, you’ll need to have a down payment and additional monies for closing costs. Depending on your budget, you could be looking at $30,000 or more needed to close on a home; get your finances in order and then journey down the road to homeownership
Get your credit in check
So, how’s your credit? Do you have credit? If you’re planning on buying a home, you need to have established credit and have kept it up.
If you don’t have credit established, now’s the time to start building your credit – having no credit is as much of a negative as bad credit when it comes time to apply for a mortgage. Apply for a credit card and start making small purchases with it; most importantly, pay off the balance each month. If you’re in the market for a car, you can finance part of your purchase to help build your credit score. If you have student loans, continue to pay them on time, as student loans are reported to credit agencies and your payments help build your credit.
Are you ready to buy?
While you may be in the position to purchase a home financially, is your lifestyle suited for homeownership? If you treat homebuying as a long term investment, you’ll want to consider the neighborhood and area schools if you have a family or plan to start one. You’ll also want to consider whether the home you can currently afford will be adequate to house a family if that’s part of your plan.
What’s your commitment level?
While details such as neighborhoods and school districts are practical considerations when buying a home, there are two real estate tips you want to follow closely before diving into homebuying. First, choose a home-type that matches your available time commitment. If you don’t have the time or desire to keep up with yard maintenance, a condominium may be the right fit for you. Second, consider whether you have the financial means to commit to property maintenance.
Renting appeals to many Millennials because many maintenance considerations are covered by the landlord or property management company. If your abode needs a new roof, you don’t have to worry about coming up with $10,000 to take care of it. If lawn care isn’t in the cards for you, or you’re not in a position to hire a company to take care of your property, you may want to wait until you’re in a position to oversee regular yard maintenance. Make sure you’re ready for the maintenance aspects of homeownership before leaping.
Once your affairs are in order and you’re ready to start house hunting in earnest, take the time to get preapproved for a mortgage before heading out. Many real estate agents won’t show homes to potential buyers without a mortgage preapproval on the table, and it can easily mean the difference between you getting your dream home or losing out to the next buyer in line. Getting your financing in order will also give you a realistic picture of what you can afford in a house, which will help narrow down your available options.
When you’ve taken the time to plan for homeownership, you’ll find the process of closing on a home goes much smoother. Most importantly, try to take time to enjoy the most important purchase of your lifetime – you deserve it!