You would like to start building a new life in a new home. You may have received a postcard for real estate marketing from a reputable company. How do you begin the home buying process?
Consider All the Costs of Buying a Home
The amount of your mortgage payment is not the only thing you need to think about when budgeting for a new home. In almost all cases, you will be obligated to make a down payment on the house. You may anxious to buy a new home, but you have to be prepared to pay a few percentage points of the home price before you can proceed.
You will also need to save some money for the cost of actually moving into the house. Will you be using a moving company, or will you be moving your possessions on your own? Does the house you are moving into need some work? There will always be some unexpected moving expenses as well.
Look at Your Credit Report
It is a good idea to pull your credit report every month no matter what. It is especially important to do this before contemplating a large purchase like a home. Credit scores range from 300 to 850.
If your credit score is less than 600, you will most likely not be able to get a loan with a low interest rate, and your down payment will be larger. If this is the case, you may want to wait until you can raise your credit score above this threshold.
Examine Your Budget
One mistake that many homebuyers often make is to take on more debt than they can repay. If you do this, you will not be prepared for any surprise expenses, and your debt will begin to spiral.
Take a look at your current household budget. If you do not have one, there are many websites with templates and even some that will connect to your bank accounts to make budgeting even easier. Experts will usually advise that you spend 30% of your income or less on housing.