5 Tips For Buying Your Own Home

Buying your first home is a big milestone. It’s also one of the most expensive purchases you will make. 

Be ready to compromise on a few things. You will need to be flexible in order to find a house that meets your needs. You’ll also need to have 3-6 months of expenses saved up in an emergency fund. Or even better, having protection and coverage on your home can help with costly repairs. For example, appliance warranties help homeowners reduce cost on appliances and repairs that are needed. 

1. Know What You Want 

Homebuyers should make a list of the features that are important to them. These can range from broad desires like location to specific amenities like a spacious kitchen or master bedroom. This step is especially crucial where real estate prices can quickly exceed expectations. Using tools like home affordability calculators and credit score checkers can help you determine your financial preparedness for a mortgage as well. 

It’s also a good idea to avoid running up debt or closing credit accounts before buying a home, as these actions can affect your debt-to-income ratio and potentially imperil your final loan approval. Ideally, buyers should choose a property that they can enhance with their own DIY skills and that will add value over time. This is a particularly important consideration for first-time buyers. 

2. Know What You Can Afford 

Buying a home is the biggest financial decision you’ll ever make, and it’s important to know what you can afford. Use a home affordability calculator to help you decide how much house you can comfortably afford and only consider homes that fit within that budget. 

You’ll need to have cash saved for a down payment and closing costs, and you should have an emergency savings fund that can cover three to six months of living expenses. Having these things in place before you start shopping is an excellent way to avoid any surprises down the road. 

It’s also helpful to understand your finances by looking at your income, assets, debts and spending. This will help you determine how stable your financial position is and if now is the right time to buy a home. 

3. Know Your Credit Score 

Your credit score is a key factor that lenders consider when deciding whether or not to lend you money. It determines how much you qualify to borrow, and it can affect your mortgage terms (e.g., the interest rate you pay). Generally, mortgage lenders 

use information from your credit reports (created by the three national credit reporting agencies, Equifax(r), Experian(r) and TransUnion(r)) to calculate your credit scores. 

To ensure your credit is ready for homeownership, check your report regularly. It’s free and won’t hurt your score. Also, limit new credit applications within a year of

applying for a mortgage and reviewing your report to fix errors that could damage your score. Aim for a score of 720 or higher. You’ll need it to be eligible for most mortgages, including those backed by government agencies like the VA and FHA. 

4. Know Your Budget 

Homebuying involves a lot of expenses beyond the purchase price and down payment. For example, there are fees to apply for a mortgage and to pay for things like running your credit report and surveying the property. Also, homeowners insurance and association fees can add to your monthly costs. 

To determine what your budget is, start by listing all of your recurring monthly expenses. Then, look at each category to see where you might be able to cut back. Ideally, you’ll have enough savings to cover the down payment and additional expenses without affecting your day-to-day quality of life. This will also make it easier to get approved for a mortgage. 

5. Know Your Options 

Buying a home is one of the largest financial commitments you’ll make in life. If you have enough savings, your finances are stable and employment is secure, it might be a good idea to start your search. 

Before you begin house hunting, it’s a good idea to get pre-approved for your mortgage. This will show sellers that you’re serious about purchasing and help you stay within your price range. 

Be sure to consider ongoing costs like homeowners insurance, real estate taxes and association fees (if applicable). Depending on where you live, these can add up quickly. Be sure to also budget for any upcoming expenses, such as major repairs or renovations.