So you’re ready to buy your first home? No more wasted money on a place you can’t paint, not having to call to complain about your upstairs neighbors stomping too loudly, and being able to buy a new cat because you just want that 5th cat! ! You’ll finally be able to save for that vacation, start your family, and have a place that is all yours! A place of your own to grow, love, and be free in. Although, before you end that lease; there are some preparations to do in order to make that master bathroom a reality. In the world of home buying, you may feel a bit out of place and even overwhelmed. But I am here to help you understand the process between initially WANTING to buy a house, to BEING a new homeowner. So here are a few things to expect and prepare for in order to get to that beautiful end goal.
1) Saving for a down payment:
Let’s be honest, to save money you sometimes have to spend money. So saving your extra moolah at the end of every month is going to be your best bet to being able to meet your goal of owning a place of your own in a timely manner. Depending on your budget of what you want to spend/can afford and what type of home loan you apply for… You will need money to put down on the home. For instance if you get a 30 year fixed rate mortgage, they usually require a 5% down payment. So, if you are buying a home that is $200,000 you’ll need a down payment of $10,000. It sounds daunting at first but that’s why it’s important to research and prepare to the best of your ability in order to move from renting to buying your home. Start by finding and sticking to a clear savings goal. Be sure to make the end goal as manageable as possible. You don’t want to be stuck with a mortgage you can’t afford or be unable to live comfortably. Some ways you can start cutting unnecessary monthly costs are:
- Start couponing: Find deals on groceries and eat off brand! It’s the same products and over the course of you saving, you’ll have some extra cash put away in the end.
- Stop eating eating out: You’d be surprised just how much money goes down the drain each month due in part to eating out on top of not sticking to an exact grocery list. If you eat out; try and do it once a week in order to cut those extra costs.
- What subscriptions can you do without: How often do you REALLY watch Netflix instead of DirectTV or visa versa? Maybe you spend $20 a month on a gym membership you barely use. Do you have the most expensive internet package even though you rarely spend time using it? Cut the costs and save the extra cash!
Take it from me, it all adds up. Instead of paying $200 every two weeks at the store you can save an extra $50-$75 dollars by watching for deals as well as buying off brand products. As well as going to stores that sell the same items for less money than other stores. Don’t stop to get that bacon, egg, and cheese biscuit meal every morning on your way to work and cook your meals instead. I can’t tell you how many times I spent so much money on food at the grocery store only for it to go bad because we ate out every day instead. It seems like it’s just $5.00 but that can cost you an extra $100 a month if you eat that five days a week. Not counting if you eat out any other meal. If you don’t use your Hulu or Netflix account then that’s another place you can save! Or if you only watch Netflix when you’re home anyways then there is no need to spend $50 dollars on DirectTV. There’s no need to spend $111 on internet when you are never home to use that much either! Cutting extra costs is for sure your greatest way to save money. You could save HUNDREDS of dollars a month if you just prioritize and cut out things you don’t need nor do you use!
(Also, depending on if you have some spare free time; now is the time to pick up a side hustle! Maybe you have some time to spare a couple hours a day to be an Uber driver? Do you have a hobby that can bring in some extra money on the side? Perhaps you know someone who may need your services on the weekends! There are so many different ways you can get creative and make saving for your dreams more realistic and doable!)
2) Focus on developing/bettering your credit score:
Chances are you have a credit score but have you checked it recently? Has it been something you always meant to work on or do you feel confident in where it’s at? This is by far one of the most, if not THE MOST important task you need to prioritize as you begin saving for your home and the costs that come with buying. If you don’t have much of a credit history or if you have bad credit then that severely impacts your ability to get a home loan. So now is the time to research ways to improve your credit and develop more of a history in order to be in the place where you can be approved for a loan. Start by making sure you get your bills paid on time and don’t skip payments. Perhaps you can open a credit card to pay off each month to boost your score/get more history under your belt! Now is the time you begin to focus on the credit aspect of buying your first home. Remember that your credit will affect your life more than you think. Everything you do and want to do in life will always depend on where your credit is! Here are some ways to fix your credit fast:
- Pay bills on time: When lenders review your credit score they’re very interested in how reliably you pay your bills. If they can see that you are dependable and make your payments on time then they can determine that you are a good investment. You have shown that you can be dependable and reliable with your payments so you will be more likely to get a home loan easier so keep that all in mind!
- Pay off your debt: Start by determining what kind of debt you have. Is it student loans, credit card debt, or something else? One of many ways to be able to pay off your debt easily is to start by beginning to pay off your debt on your credit cards and keeping the balances low. When you open a new credit card, do so only as needed. By opening new credit cards it can damage your score by creating too many inquiries and also just another resource to accumulate extra debt. In the same breath; don’t close unused credit cards! By doing that, it only creates a hard inquiry on your credit score. Too many of those will impact your credit score and will remain on your credit report for two years. Also, as you could probably determine on your own… Stop from spending with your credit card. To pay off your debt, you have to manage your ways of spending. So not spending is pretty much your best bet to not rack in anymore debt!
- Develop your credit if you haven’t: Start to create/build your credit history now if you haven’t. Start by applying for a secured credit card which is specifically designed to help people establish their credit. If you rent, get your rental account reported through the credit bureaus. If you have a good record of paying on time, talk to your landlord to find out if they report rent payments to credit agencies. If you don’t have too much credit history then remember to not apply for too much credit at once. Doing so will do more damage than you are wanting, setting you back even further than when you first started. All the while keep checking in on your credit report to ensure that you are on the right track and look for any inaccuracies.
3) Search for the right Realtor:
Buying a home is a process. It’s not ever going to be something you just wake up one day and decide to do tomorrow. There are ins and outs of the whole process that is both exciting yet unfamiliar. So finding a realtor that is knowledgeable, committed, and keen on helping you not only find your home but find it for the best value possible is extremely important. There is a whole lot of money that is involved in buying a home. Down payments, closing costs, utilities, inspections, and possible fixes/renovations that are needed to be some of the costs you will expect in homeownership. Having a reliable and focused realtor on your team is one of the biggest assets to your journey to owning. There will be times where you will be puzzled at the terminology and feel so overwhelmed because you just don’t understand where you go after you find a house you love. Your realtor will, and he/she will be there by your side to ensure a great experience and answer every question you have. Finding a realtor that you get along with and trust in values will make the whole process much more smooth and stress free. So meet with multiple! Don’t just find the first one that comes along and stick with them just to avoid prolonging your search. Your realtor will be your saving grace in the end! Do your research and ask plenty of questions. Get to know them on a fundamental level. You’ll be spending quite a bit of time with them, it’s important to be able to like them and know they have your best interest at heart.
Hopefully this hasn’t scared you away from buying! It sounds like a long drawn out process and in all honesty, it is when you are first becoming a homebuyer. Yet, it is very manageable and the end goal is one that you will be able to get to with the right preparations. Just remember that with each goal you set and stick to; the closer you are to your family home. So stay focused, stay motivated, and stay responsible. Remember that if you ever need to have answers to questions regarding your journey from renting to buying; reach out to a realtor! They will give you the best advice as to how to get to where you want to end up. You will make it there by taking the steps and beginning to learn more about all that you’ll need to expect in the home hunting chapter of your life. Everything is always done one step at a time! Good luck and congratulations on this exciting part of adulthood!