subject: Buying Your First Home [print this page] Buying your first home can be a daunting process if you arent prepared. Following a few simple steps can eliminate some of the worries and unexpected problems that may arise. Be aware that purchasing real estate can be stressful so take your time to do your homework.
Be Prepared
Talk to lenders and find out how much money youll need for a down payment and how much of a loan you can afford. The general rule of thumb on a monthly mortgage payment is approximately 30 percent of your income. Ask the lending company for an estimate of closing costs. If you are saddled with credit card and other types of debt, you may qualify for less. You will want to plan a monthly budget with regular expenses such as utilities, insurance, taxes, and maintenance. Check your credit reports to make sure they are accurate.
Looking for Property
Decide if you want a single-family house, a condominium, or a co-op. Youll need to spend some time determining what neighborhoods appeal to you. Consider proximity to work, school districts, and other places you visit. Since you are buying your first home, it is probably a good idea to work with a real estate agent who can answer questions and help narrow down listings in your price range. Once you find a property that appeals to you, your agent will guide you through the process of making an offer contingent on a favorable inspection, negotiating with the seller, and ordering an inspection.
Insurance and Warranties
You will need to shop for different types of insurance when you purchase your home. Title insurance is required to protect the owner in case there are liens or outstanding loans on the property. Youll need homeowners insurance to cover damage from theft, fire, and other personal liability. If you are in a flood zone, you may be required to purchase flood insurance. Consider buying a home warranty policy to cover unexpected expenses related to the house, such as mechanical, plumbing, and wiring problems.
Closing on the Property
After all the details have been ironed out, and you have been approved for the mortgage, you will be able to close on the property. You will want to do a final walk-through to make sure the house is in the condition you expect. The actual closing involves signing documents and making payment to transfer ownership. After the closing you will be able to move into your new home.
