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Your Home Buying Checklist

Buying a home is likely to be the biggest financial commitment of your life. Few purchases are as big in terms of money and emotional attachment. The roof over your head is an investment in your family’s future, and you cannot afford to leave anything up to chance.

If you are in the market for your first home, you need to create a checklist you can refer to as you shop for a home, and the mortgage that will allow you to buy it. Here are some things you can do to get started on the road to home ownership.

Check Your Credit Report

Your credit score will influence every part of the home buying process, from your ability to qualify for a mortgage to how much home you can afford. It is vital for all home shoppers to assess their financial situations before they even start shopping for a home.

If your credit report is less than stellar, you might have trouble qualifying for a mortgage, and that could scuttle your home search before it even begins. If you do not yet know your credit score, get it. Many credit card issuers now provide a free credit score, and you can review your credit report at no charge as well.  If you need to make improvements to your credit score, doing so now will make the rest of the home buying process much easier.

Calculate Your Monthly Payment

Once you know your credit score, you can start calculating the home price you can comfortably afford. Some mortgage brokers may try to convince you to buy more home than you can afford, and that would be a mistake. If your calculations show that you can afford a $250,000 home, shopping for houses in the $200,000 range will give you more wiggle room and let you sleep soundly in your new bed.

There are plenty of mortgage payment calculators on the Internet, so feel free to experiment. Plug in a number of different interest rates and down payments until you find the sweet spot that gives you an affordable monthly payment.

Keep in mind that putting at least 20 percent down means you will not have to pay for private mortgage insurance (PMI). PMI can be costly, and avoiding it where you can is always a smart move.

Assess the Neighborhoods

Buying a home means buying into the future of the neighborhood, so choose your area carefully. Check the crime statistics, public school graduation rates and average incomes of the neighborhoods you are considering. Ideally you will want an up-and-coming neighborhood, one where home prices are still relatively low, but an area that has great future prospects.

Many real estate investors look for parts of town where a new factory or large employer has just set up shop. That can be a smart strategy for residential buyers as well. The new employer means incomes may be on the rise, and those increasing job prospects can attract new and wealthier residents. That all adds up to higher home values in the future, something that every home buyer should want.

Buying a home is never an easy process, but the right preparation can make all the difference. Your home is the most important financial purchase you will ever make, so you want to plan carefully before you make your move.

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