Whether you’re looking for more space for your family, living independently for the first time, or buying a rental property, becoming a first-time homeowner is a special milestone. To help you feel prepared to buy your first home, here are some key things to keep in mind and basic steps to take.
Consider your budget
When calculating what you can afford, think about what payment you are comfortable making monthly and what your down payment will be. There are some key numbers to consider: annual income, any budget for repairs and maintenance, savings, property taxes, and closing costs, among others. It can help to get preapproved for a mortgage early—this can give you an idea of what sort of mortgage you’d be eligible for. All these things and more will inform your final budget.
Narrow down your desired location
When house hunting, be mindful of what different living areas offer: access to public transportation, local school district ratings, property taxes, property value trends, local options for entertainment, proximity to emergency services and care, commute to work, closeness to friends and family, and more. Picking a location you love will help you feel enthusiastic about the house-hunting process.
Make a list of must-haves and nice-to-haves
Whether your new house will be your starter home or forever home, making a list of must-haves and nice-to-haves will help inform your final purchase. Think about must-haves such as the number of bedrooms and bathrooms, square footage, and the condition of the home (whether or not it will require repairs). Some nice-to-haves might include a backyard, a swimming pool, or a multi-car garage. Knowing what you need to have and what you’d like to have will narrow down the options.
Find a reliable real estate agent
Once you know what you’re looking for in your first home, you can benefit from enlisting the help of a real estate agent who can help you expertly navigate the house-hunting process. (While buying a home without a real estate agent is possible, this may be risky—and stressful—for first-time buyers.) A real estate agent can find homes that meet your needs, book showings, and help negotiate the final deal. You can find a good agent by asking friends and family for referrals or by researching top-reviewed agents in your area.
Deciding on purchase protection
A final step in the planning process is deciding what kind of insurance you may need—both for your home and for yourself. Your lender will likely advise you on what’s needed. For example, if you’re making less than a twenty percent down payment, you may be obligated to get private mortgage insurance. You may also need to get homeowner’s insurance. Another relevant consideration is life insurance, which can provide financial security for your heirs should anything happen. First-time homebuyers often opt for a term life insurance policy that matches their mortgage term, providing a layer of financial security while they continue to make payments.