Being a first-time homebuyer can be exciting, but it can also be nerve-racking. Chances are, you don’t know a lot about the process. And why would you? You’re not a real estate agent!
The good news is, you don’t have to be a professional to make a good home buying decision. You just have to be patient and do your research.
Before beginning the home search, make sure you have a good understanding of what you can afford and what type of property you want. Here are five questions every first-time homebuyer should ask: themselves:
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1. Do I make enough money to afford a home?
Many advisors recommend shoppers use the 28/36 rule when determining whether or not they can afford a home. To put it simply, your mortgage should be 28% or less of your annual income. And all your debt payments should be less than 36% of your annual income.
That said, average home prices vary all across the world. So, the annual income you’ll need to afford a home in Phoenix, Arizona will be different than what you’d need in New York City, New York.
2. What kind of down payment do I, as first-time homebuyer, need?
One of the most challenging parts for first-time homebuyers is saving enough for the down payment. But luckily, potential buyers don’t have to put 20% down in order to be approved for a loan. Some loans require 10% down, while others require even less.
Before you buy a home, check to see what type of loan you’d be approved for. For example, if you have a high credit score (at least 580), you could be approved for an FHA loan and only have to put 10% down on your home.
3. Is my credit score high enough?
The credit score you need to purchase a home varies depending on the mortgage you’re applying for. But one thing is certain, as a first-time homebuyer, you want your credit score to be in good shape. The lower the credit score you have, the harder it will be to qualify for a loan with a reasonable down payment.
4. What kind of property is right for a first-time homebuyer?
Purchasing your first home is a big commitment. Besides considering all the many costs of owning a home, you also need to consider what kind of property is right for you and your family.
For example, condominiums require less maintenance than homes. But with so many condo association rules, you might not be able to customize your home as much as you’d like. While you can customize all you want with a single-family home, you’ll be responsible for all the maintenance and repairs – which can easily add up.
Before beginning your home search, research the many different types of properties and costs associated with them all. Pick an option that aligns with your finances, so you’re
5. How long does it usually take to buy a house?
There’s no denying the home buying process can be a lengthy one. Besides the time spent finding your dream home, you have to find a real estate agent, get approved for a loan, make an offer, get a home inspection, appraisal, etc.
The amount of time it takes for each step in the home buying process varies. But typically after the contract is signed, it can take anywhere between 30 to 45 days to close.
