While you are renting a home, this gives you time to work on improving your credit and save up a down payment to buy your own home, for instance. And while you rent, you can take time to decide what you want in the home you will eventually purchase. As you prepare to buy a home, here are some tips to get you started on the process and find the right home for your needs.
Make a Wish List
There are many types of homes available to purchase, and each one has a different combination of features and amenities. It can be helpful to make a wish list of what you want in a home. This can include non-negotiable features that you are not going to compromise on, such as a garage, the laundry on the main level, or a large back yard.
You may also want to make a list of features that you would prefer but are okay if you don't get them. This might include hardwood floors through the home, a finished basement, or mature trees in a fenced-in yard. If you are searching for a home with anyone else, make sure you are on the same page with your wish list and features you might consider as non-negotiable.
Determine Your Purchase Budget
Another important step you can begin before you even start looking for a home is to figure out what you can afford. This step should include your listing all your monthly expenses and responsibilities. Don't forget to include expenses, such as child care, prescription refills and medical expenses, and contributions to a savings account. After you list all your expenses, subtract these from your monthly income to find out how much you have left over for a house payment.
As part of determining your home-buying budget, you should talk to a mortgage broker about pre-qualifying for a mortgage. This step also includes finding out how much of a total loan amount and a subsequent mortgage payment you can qualify for. Talk to your mortgage professional about the types of mortgage programs available, especially for first-time home buyers. As a first-time home buyer you may qualify for a mortgage with low down payment requirements and a competitive rate.
Remember when you are applying for a mortgage your mortgage professional will pre-qualify you based on your income and credit for a maximum loan amount. But this does not mean you need to find a home for its full amount. For example, if you are prequalified for a $250,000 mortgage, you can specify your home price search at up to $200,000. You can still buy a single family home but for a lesser amount, which can help you budget for other unexpected expenses and not overdo your home expenses.
