It’s only natural for a first-time homebuyer to have questions. For many of us, buying a home is the largest financial decision we make. It’s important to be thoughtful and confident in whatever choices you make. Check out the important questions below to help you prepare for homeownership.
1. Is It Better to Buy or Rent?
The rent vs. buy decision is common among Americans looking to make their next move. Some say that buying is always a better financial choice, but that is not necessarily the case. It really depends on your individual financial situation.
It’s important to ask yourself how long you plan to stay put, how stable your job is, how the monthly costs compare, how the total costs compare, and if you are both financially and emotionally ready. The truth is, there is no clear right or wrong answer. In some cities, and for some people, buying a home makes more sense, but for others, renting may be the better choice.
2. How Much House Can I Afford?
Having a realistic estimate of how much home you can afford will help you gauge your next move much better. You can use online tools to help estimate the total value of a property you can afford, what your mortgage payment and amount are likely to be and what kind of down payment you will be looking at. Your income, credit score, debt ratio and desired location will all play an important part in the calculation. You want to find a home you are happy with without scrambling to live month to month. It’s important to establish your housing budget carefully. (You can check your credit scores for free on Credit.com to see where you stand.)
3. Is It Better to Buy an Existing Home or Build?
Most buyers spend a lot of time and energy either searching for or designing the perfect home. It makes sense, because each buyer typically has a wish list that includes specific needs and wants. Buying an existing home will almost always be faster and more convenient, but does involve numerous steps like viewing homes, making offers, home inspections and closing. Plus, you may have to do work on the home to make it fit your needs. Building a home, on the other hand, ensures you can get exactly what you want (so long as you can afford it). This usually comes with a longer timeframe and heftier price tag.
4. How Do I Find a Lender?
It’s important to do your research when it comes to choosing a lender. You want to find the best offer and also a reliable lender. It’s a good idea to research broadly and then narrow your focus once you find a type of lending environment that makes you most comfortable and offers reasonable rates in your area. You can ask at the bank or credit union where you currently have an account and turn to friends and family members for referrals. Applying to multiple lenders at once can increase your chances of approval at the best possible rate without dragging down your credit score.
5. What Happens at Closing?
Closing is the final step before you become a homeowner. It’s a good idea to know what you are in for during this step. This will be when the title of the home is actually transferred from the seller to the buyer.
Knowing the answers to these five questions can help start you off on your homebuying journey. Next, you can try to find the right neighborhood and home for you. Before you know it, you will be an educated homeowner enjoying the property that fits your personal needs and goals.
More on Mortgages & Homebuying:
- Why You Should Check Your Credit Before Buying a Home
- How to Find & Choose a Mortgage Lender
- How to Search for Your Next Home