One of the most important things first-time homebuyers should explore – how much home can they afford?
By Gustavo Gonzalez
You’ve been dreaming day and night about it: Buying your first home. It’s a thrilling prospect for everyone, especially first-time homeowners. With countless properties available online at your fingertips, it’s easy to begin house hunting as soon as the idea strikes. But it’s critical to determine your budget as a homebuyer before you start shopping seriously.
Determining your creditworthiness can help you learn what size mortgage you’ll qualify for and lead you to a realistic homebuying budget. When you obtain a pre-approval from a mortgage lender, you’ll know exactly what you can afford. Having a pre-approval letter will also make your offer more appealing to sellers. To ensure you are set for success for the homebuying journey, contact your Coldwell Banker-affiliated agent, who can connect you with a trusted loan officer.
Prior to any significant purchase, it’s important to set a realistic budget, and buying a home is no exception. Do a reality check on your personal finances. Scrutinize your monthly income, expenses and debt-to-income ratio, so you can assess what funds you’ll have available for a down payment and a monthly payment once you move into your new home.
Another important piece of this puzzle is your credit history. Check your current credit report for any debts you need to pay off so you’re in a stronger position when it comes time to apply for a loan. The higher your credit score is, the more access you’ll have to loans and lower interest rates.
Refer to a handy, online mortgage calculator to study property purchase prices. Do a quick search online and you’ll find a variety of free options. In fact, many allow you to figure in important, relevant factors such as property taxes, down payment amounts, interest rates and home insurance to provide a detailed breakdown of what your monthly payments would look like.
To be really savvy, factor in related expenses such as upfront costs, closing costs and other fees you’ll have prior to closing on a home. Also, budget for standard property maintenance expenses such as homeowner’s insurance, taxes and repairs that may be needed in the short term after closing.
Comfort and joy in your first home start with setting realistic financial expectations ahead of time. Buying a home will likely be the biggest purchase of your life, after all.