First-time home buyers may find it difficult to navigate the process of purchasing a new home. CNBC lists several reasons why buying a new house is harder nowadays. The first reason is the stiff competition in the market, with lots of other buyers with strong credit histories. Another reason is the pandemic; most homeowners refuse to leave or sell their homes during the pandemic.
For these reasons and more, new home buyers definitely need a little help when it comes to finding the perfect home. In Massachusetts, they have several programs that help first-time home buyers. For non-residents of the state, though, this article can give a little piece of advice.
What are your needs?
Need is different from wants. Knowing what you need may be the key to letting you finally purchase your first home.
In figuring out your needs, find which makes sense for the entire family and your budget. It’s tempting to buy a home where everybody gets their own room, but is it sensible with what you are earning and what you have saved at the moment? Remember, a first home does not need to be the last home; you can always buy a better, bigger one in the future once you have gathered enough savings.
Considering the location of a home is also important because this will largely affect how you and your household members will live their daily lives. Proximity to work and school must be included in the priority. When you have figured out what you need in a home, make a list so that you know what to search for when viewing homes.
What’s your budget?
Budget is the main consideration when choosing a home. Choosing a home that fits your budget will avoid unnecessary hassle and stress in the future.
To know how much a home really costs, a mortgage calculator will be handy. Using a mortgage calculator will give you an estimate on how much you need to pay every month. Aside from this, calculating the total cost of your home must include property taxes as well as homeowner’s insurance.
You must also anticipate future expenses in your home, including maintenance and repairs or unplanned replacements. A homeowner’s association fee may be required, too, depending on the type of home. Lastly, electric, water, and internet bills must not be forgotten. Factoring all these can help you budget properly and prepare for purchasing your new home.
In addition, the cost of a home may depend on whether you are buying an old house or a new house. Inspections of the house are necessary to know hazards that may be present when purchasing an existing home. Inspections are also crucial so that you know if you have room in your budget to fix the areas of the home that need to be fixed.
Even while you’re still not planning to buy a house, you should start saving as soon as you can. Buying a house involves a lot of money, and it takes years to save up for a first home.
To start saving, it will be wise to set up an auto-transfer from your paycheck to your bank account. To add to your savings, set aside your bonus checks and tax refunds and put them for your future house’s savings. Besides that, you can also start looking at how you spend your monthly salary and start cutting unnecessary expenses.
For example, instead of buying a frappuccino every day, put that money in your savings account instead. Taking homecooked meals to work can also be an effective way to stop spending too much money and start saving.
Strong credit score
Getting a loan will help speed up the process of buying your first home. However, getting approved for mortgage loans entails good credit scores. To get approved for your home loan, these are a few things to remember:
- Avoid buying a new car or opening a new credit line when applying for a home loan. This will give a negative impression to lenders, and it will harm your credit score.
- To build a good credit reputation, you must have active credit card accounts. Though credit cards can be tempting, this is necessary for major credit bureaus to track your credit file. Without a file, it may also be difficult for you to get your loan approved.
- Finally, never miss on credit payments as this will hurt your credit score. A 30-day late payment will result in a low credit score.
Once you have successfully built a strong credit score, you are on your way to having a competitive edge over other home buyers.