Preparing to Buy Your First Home

Although buying your first home can be incredibly exciting, the experience can also be overwhelming. This is one of the reasons that so many Americans are postponing their first home purchase, making 2011 the first year that more than 14 percent of the population below the age of 34 lived at home with their parents. There are so many small details that can have a huge impact on your financial future, so it is important to have the right advice from the time you first start looking at homes to the final moment when you sign a contract for purchase. Read on for helpful tips about preparing to buy your first home.

1. Explore Your Financial Situation

The first step for any first time homebuyer is to track finances for several months in order to get a clear picture of their situation. Track income and expenses in order to determine how much you can afford each month in home payments. Keep in mind that finding a maximum budget does not mean you need to spend every spare penny. Many people will be more comfortable with a home payment slightly below their maximum allotted amount. Although each buyer is different, certified public accountant Doug Beecher recommends, "A good place to start is to multiply your gross income by 25 percent." This amount should be your starting point for home payments each month.

New Home photo from Shutterstock

2. Obtain Your Credit Report

Potential homebuyers should look up their credit reports and find out their FICO score. This number will be on a scale between 350 and 800. A lower number, or one below 500, may make financing nearly impossible. The higher your number, the lower your interest rates will be and the more trustworthy you have been deemed, financially.

3. Decide What You Want in Your First Home

Before you begin looking at homes, you will need to spend time writing down exactly what you expect out of your first house. Decide what the nonnegotiable factors are and what are merely wants instead of needs. For example, you may absolutely need a home with a backyard and two bedrooms, but you also want a covered garage and an open plan kitchen if possible.

4. Find the Right Help

Purchasing a new home is rarely an individual process. The average person will need financing from a bank or credit union, and a realtor will help connect you to the right homes in your budget. Finding the right help is incredibly important, so make sure that the people you work with are considerate, able to answer your questions, and return your calls quickly.

While buying your first home is not always a quick process, it can be made much easier if you have the right information and the right help. Be sure to spend plenty of time investigating all your options before making a final decision. Many homeowners say that they actually find a home they prefer more than their own within six months of purchase, so try not to rush the process. By comparing and shopping around, you can rest assured in the knowledge that your home is perfect for you.

John Keller is a realtor who loves to write. He recommends getting a mortgage primer before shopping for a new home.

Take the Next Step:

• For more on buying and selling homes, please visit here.

Share your thoughts about this article with the editor: Click Here

Copyright 1996 - 2013 "The Dollar Stretcher, Inc." All rights reserved unless specifically noted.

Contact the Dollar Stretcher at:
Dollar Stretcher
PO Box 14160
Bradenton FL 34280
941-761-7805

"The Dollar Stretcher, Inc." does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation.

Also In This Week's Issue

• How to handle your parents moving in with you
• 7 tips for renters
• 9 reasons your credit card was declined
• Filing Ch. 7 on your own? Avoid these mistakes
• How to pay debt while improving credit score
• Avoid making this common investing mistake
• Life insurance from marriage into midlife
• Affordable life insurance after 50? Or 60?
• How to track unclaimed life insurance money
• How to quickly boost your credit score
• Why good manners can boost financial success
• When it's OK to tap your IRA

In The Dollar Stretcher Community

• Homemade smoothies
• Dollar Stretching Recipes: Slow cooker refried beans

Reader Favorites

• Cleaning fiberglass showers
• Grandma's beauty secrets
• Why use a pressure cooker
• Make money at the farmers market
• Easy desserts