Buying a home can be a complicated process for anyone, especially for first-time home buyers. Since it is such a huge investment involving a lot of legal procedures, paperwork, and time,
buying a home is never easy. Fortunately, there are many tips you can follow to make your first home-buying experience a little less scary.
Preplanning
The first step is to make sure that buying a home is the right thing to do. Since your home will be a huge investment, you'll want to make sure you can afford all the costs involved. You should do plenty of research and calculations about how much you can afford for a down payment and how much you could spend on monthly
mortgage payments. Secondly, you should be sure that you want to stay put for a while. It might not be worth going through the trouble of buying a home if you are going to move out in a year or two.
TIP: You can use the handy Movers.com mortgage calculator to help you plan your budget and determine whether you can afford to buy a home.
Once you determine that you indeed want to buy a home, make a list of what you want out of it. For instance, you'll want to decide in advance how many bedrooms and bathrooms you want or the maximum distance from your workplace. By having these requirements laid out in advance, you and the
real estate agent will have an easier time
finding homes that best meet your needs.
Finding a home
Your real estate agent will show you several homes that closely meet your requirements. As you go about the search, keep in mind the following tips:
- Bring a camera and a notepad. By taking pictures and making notes as you look at different houses, you'll have documentation about what you liked or didn't like about each home.
- After looking at different places, you can review your pictures and notes, helping you determine which homes you liked the best.
- You can then revisit your top choices as you go about making your final decisions.
- Remember, if you see a home that perfectly meets your needs, don't deliberate on it too long. Someone else might snatch it up if you wait.
Getting a mortgage
Another important aspect of buying a home for the first time is getting a
mortgage, the loan used to pay off your home. Getting a mortgage today is a bit more difficult than it was in the past for first-time homebuyers. Due to the current economic conditions, banks have become more hesitant to loan money to home buyers, especially young people or those buying a home for the
first time. However, there are still plenty of tips and suggestions to help you get approved for a mortgage.
The important thing to remember is that you should look around for different lenders and banks before trying to get a mortgage from just one. By shopping around, you will find that each lender and bank may offer varying deals and interest rates. Though you might not get approved for the most appealing mortgage, it is still important to investigate all of your options. That way, you'll have a better chance of getting approved for one type, rather than getting rejected and having to start all over.
Did You Know?
If you do not get approved, whether due to large debt, bad credit, or a number of other reasons, you may still attain a mortgage with the help of a guarantor. A guarantor (most often, a parent) will sign along on the mortgage and will be held responsible if you default on your payments.
First-time homebuyer tax credit
While buying a home for the first time can certainly be a challenge, those who do can take advantage of the government's tax credit for first-time homebuyers. As long as you have a binding contract on the sale of your new home by April 30th, 2010 and close on the sale by June 30, 2010, you will be able to receive an $8,000 credit when you file your taxes.
Though this tax credit for first-time homebuyers may be welcome, there are some restrictions. If your income is at least $125,000 (or $225,000 for couples filing jointly), you will not qualify for the tax credit. If your income is under these levels, then you will need to provide a copy of the Form HUD-1 or the settlement statement (including the names and signatures of those involved in the sale, the address of the home, the price of the sale, and the date of the sale) along with your tax return.
Few things in life can compare to the feeling of owning your own home. Though it may be a difficult (not to mention expensive) process, the end result will be well worth it. As long as you do your research, know what you can afford, and can obtain a mortgage, you'll be well on your way toward owning a home.