Buying a home is a huge investment in time and money. For most in the Tri-state area, it’s also the largest purchase they will make in their lifetime.
Many first-time homebuyers find the process intimidating, given the many steps involved in the transaction. But with adequate research and preparation, the journey toward purchasing a new home can be a relatively smooth one.
To help your home buying process become more manageable, you’ll need to take a deep dive into your finances and prioritize your home amenity preferences. Here are a few steps to help you get started.
Determine what you can afford
The best place to start is to figure out what monthly payment will fit your budget. Experts say your total monthly home expenses should not exceed more than one-third of your gross monthly income.
Your mortgage payment is only part of your monthly expenses. Property taxes, home insurance and interest should also be factored into your monthly payment.
Check your credit score
Most people will choose to finance their home, so checking your credit score is another important first step. Your credit score will help you figure out the financing options available to you.
Lenders use credit scores to determine if a borrower has a record of on-time payments and to gauge the likelihood of repaying the mortgage.
Your credit score will also impact your mortgage terms. The higher the score, the more financing options and lower interest rates will be available to you.
Borrowers with scores in the low 600s and even high 500s can still find lenders who will qualify them, but borrowers should strive for scores in the mid to upper 700s to land the best rate.
Make a list of your priorities
As a first-time homebuyer, you’ll need to determine a list of your “must-haves” for your new home. For example, do you absolutely need a space for a home office or more rooms for your growing family?
You should have a general idea of the size, location and amenities you want in your home. Figure out what feature you are willing to compromise to ensure your home fits your budget.
Shop for a mortgage
First, research mortgage rates at various lenders online. Shop around to find the lowest rate or work with a mortgage lender to help you find all of the loan options available.
There are several types of mortgages available, including FHA, conventional, adjustable rate and fixed-rate. You’ll need to learn more about them to figure out which option works best for you.
There are a variety of mortgages available for first-time homebuyers as well.
To find a professional to guide you through the process of buying or building your first home, visit the Home Builder Association of Greater Chattanooga’s online directory at HBAGC.net.