More and more young professionals are pursuing the "American dream" by buying their first home. If you're a recent college grad or have spent a few years working and saving, you may be thinking about making your first home purchase. But is that the right step for you? Here are some things to consider...
1. MONITOR THE MARKET
A first time home buyer should be like a hawk — surveying the local and regional real estate market similar to how a hawk surveys its prey. Seriously!
By knowing how the market behaves, a first time home buyer can monitor the selling prices of comparable homes in their area, which thereby allows them to be a bit more knowledgeable when going to look at homes.
2. CHECK YOUR CREDIT
One of the most important things to do months before you buy a home is pull your credit report. The worst thing you can do is to wait right before you are ready to buy to find out your old collections and debts are ruining your credit. Many younger and first-time home buyers don’t consider checking their credit, but it may save you some headache when it gets to be crunch time.
3. GET PRE-APPROVED FOR A MORTGAGE
“As a first-time buyer, it’s important to complete a preapproval early to determine what types of loans are available to you,” says Jason Knee, senior loan officer at Citizens Bank in Marlton, NJ. “It often makes sense to evaluate a few loan options, while considering the length of time you are likely to own the home. Fixed rates are the most popular, but if you plan to keep the home for less than 10 years, it may make sense to consider an adjustable-rate mortgage.”
4. CONSIDER NEW CONSTRUCTION
New homes are ideal for younger home-buyers because they require less maintenance and should not need any major improvements for years. They are also more energy-efficient which will save you on monthly bills. In some instances, builders can offer to help with closing costs and have various financing options with your preferred lenders. But, there are other benefits too. Your homeowner insurance may be cheaper as well.
5. BE PREPARED FOR UNEXPECTED COSTS
Not only will there be extra costs in your monthly mortgage payment, but there are several fees associated with buying the home, including the cost of inspection. Once you're a homeowner, you're hit with even more costs that you wouldn't have had to deal with if you were renting.