Buying a house is one of the biggest decisions, financially and emotionally, you’ll ever make. Many first-time homebuyers are age 34 and younger. Whatever age group you fit into, you’re not alone if you’re considering buying your first home. Maybe you’ve been renting and need more space, or you feel ready for a long-term commitment, financially and otherwise.
If you’re still in the process of making that decision, the New York Times has an excellent, interactive “Rent Vs. Buy” calculator that might help put things in perspective.
Are You Ready? In addition to asking yourself that question about finances, consider how ready you are in terms of emotions. When you’re renting, remember that surprises don’t require a lot of emotional investment. Rent goes up? You can move. Stove on the fritz? Crabgrass out of hand? The landlord will send someone over. Homeownership is different, though. If the furnace breaks or property taxes rise, it’s on you. That’s a potential financial burden, but experts point out that there’s a mental and emotional cost, too. Everything can go perfectly smoothly for months, and then four maintenance issues might spring up in the same week. Stress management and problem-solving skills are among the tools a homeowner needs, right alongside a lender they know they can trust.
Getting Yourself Ready
Get Your Finances in Order
Some real estate agents won’t even show homes to prospective clients who don’t have a mortgage preapproval. Meet with your lender at the start of the process to find out how much house you can afford and how much cash you’ll need to close. (More on this in a moment.)
Attend A First-Time Homebuyers Seminar
Your credit union may offer a seminar, and if not, can advise you on signing up for one that’s possibly given by a city housing department or a non-profit organization. Why not take a little time to learn from the pros? Many of the seminars are free. However, any nominal fee will be repaid many times in valuable knowledge.
Make A Down Payment Plan
Most conventional mortgages require a minimum down payment of 5% to 7% of the cost of the home, but some range as high as 20%. Your best bet is to check with your credit union loan pros and investigate all the options.
Check Your Credit Score
Get a copy of your credit report at www.annualcreditreport.com. The three credit bureaus (Equifax, Experian and TransUnion) are each required to give you a free credit report once a year.