So you’re ready to buy your very first house! While becoming a homeowner is an exciting journey, there’s much to consider and prepare before you actually buy a house. Your life plans, career, finances and preferences in a home will all be factors that affect the kind of house you can buy as well as where you’ll want to live. To help you navigate all these factors, read on to learn about the three most crucial considerations when buying your first home.
Buying a house is no small endeavor, especially when it comes to money. You’ll want to start saving up as early as possible so that you can afford a down payment. However, after that, chances are you’ll need to get a mortgage to pay for this house over time. A common plan of payment is a 30-year fixed mortgage, which holds fixed principal and interest rates, meaning you’ll pay the same amount over the life of the loan (30 years). This is one method of paying off a mortgage, so do your research and discover what works best for you. There are other mortgage options available too such as FHA, VA, among others.
Additionally, you will want to take a close look at your finances, specifically credit and debt, as these factor into your mortgage eligibility and interest rates. When making moves to purchase a house, you’ll want to ensure that you’ve paid down as much debt as possible and that your credit score is the highest it can be. Avoid other large purchases and refrain from switching jobs during the home buying process as well.
Your Future is a Long-Term Game
Your future plans should be taken into account before you buy a house, as you’ll likely live in this house until your mortgage is paid off. Will you need to pay off any past loans, like car payments or student loans? If so, you may want to research or consult a financial planner on how to juggle paying for multiple long-term payments.
Do you want children in the future? Do you think you’ll help pay for your children’s college education? Although that may be years into the future, it’s crucial to consider everything you might possibly be paying for. Many financial aspects like paying off a mortgage or college tuition are a long-term game, so starting a college fund when you decide to have children is a great way to prepare financially for the future. It can be taxing to pay for several significant costs like college tuition and mortgage payments at the same time, as well as any other loans.
Needs Come Before Wants
Next, you’ll want to consider what you need and what you want in a house. Perhaps you need at least three bedrooms or even more if you plan on starting a family. You may need an open concept floor plan with ample room for seating, for example, if you like hosting. If you have a dog or plan on getting one, a backyard is a great asset to have. If you are self-employed, a house with enough room for a home office is necessary, so read our tips on launching a home-based business while moving to a new home.
You will also want to think about where you’ll want to reside. Depending on the state or city, houses will vary in cost. If you want a house in a large city, it’s going to cost more than a house in a very rural area. Explore and research the cost of living in different areas and what will work best for you. Remember the difference between needs and wants, as your very first house might not have everything you dreamt of. Luckily, you can always renovate or add on to your home in the future to make it your perfect home. Maybe flex space is an option for you?
Purchasing your first house is quite an accomplishment, but a lot of preparation and financial planning needs to be done beforehand. By considering these three factors, you set yourself up for a smooth homebuying process.