If you think you have saved enough money, then you might be thinking of buying your first home. However, amid surging home prices, that goal might not be achievable.
Despite this, you can still buy your dream home just by coming up with an effective financing strategy. There’s no reason for you to worry. Transition to this important phase in your life by following these tips as you navigate today’s financial challenges and get close towards your dream home.
- Check your credit score
Knowing if you’re financially stable is the first part of your homeownership journey. For this, you only need to check your credit score and see if you have the capacity to buy a home. Also, this is the major factor indicating your financial readiness. To qualify for most types of loans, you should get a credit score of at least 620. Anywhere lower than that will reduce your chances of getting approved. To increase your chances, try boosting your credit standing by paying off any outstanding credit card balances and avoiding new account applications. Doing these will help you raise your credit record as well as your chances of getting favorable deals.
- Set realistic expectations
No harm comes out of dreaming about a home with an above-ground pool and a cozy patio. However, the amenities you love in a home come with a high price. Buying a luxurious home shouldn’t be your priority if you don’t have the means to get one. For this, you simply need to check if you could afford to keep the home over a long period. If not, go for a smaller and simpler home that’s within your budget. It’s not much, but it’s a good start. You can always move into a bigger home if your income situation improves.
- Know what other costs you need to shoulder
When you are buying a home, you are not only paying the price you and the seller have agreed. There’s a long list of expenses to cover before the property is turned over to you. These include capital gains taxes and stamp duty fees. Most lenders will require you to get house insurance coverage before approving your mortgage. In the end, the cost of owning your dream home will go over the initial asking price, so keep this in mind as you save up.
- Choose a location you can afford
If you have found a home you can afford, you still need to check if the neighborhood it’s located in is ideal. Homes with asking prices below average rates are usually found in less ideal neighborhoods. These are places with high crime rates and longer commute times. If you choose these places, you could compromise your need for comfort, convenience, and security for the sake of affordability. Consider your needs and find a workaround and achieve a perfect balance between price and livability.
Are you aiming to buy your dream home as a first-time buyer? It pays to make good financial and personal decisions. Use these tips and find a home that won’t leave your pockets dry.