LIFE TOPICS

Getting Ready To Buy Your First Home? Here’s What You Should Know

June 27, 2018 | Posted at 1:49 pm | by Avery-Taylor (Follow User)

Photo Credit: NeONBRAND

Sometimes, it’s a good idea to wait before you buy a house. If anything, wait long enough to ensure you’re ready. In this article, we’ll teach you how to get ready to buy your first house because sometimes the most important steps to a big life decision come before signing the contract.

Buying a home is one of the most expensive purchases you’ll make in your life, and it can be scary. But as long as you are informed and ready — you’re going to be okay. Let’s jump in and learn how to get ready to buy your first house.

Before You Buy

Before jumping into the process of buying your first home, you should first know how buying a house works. Luckily, you can learn from those who’ve ventured before you. These are a few things to keep in mind before you buy your first house:

To start, consider if buying a house is the right decision for you. Are you ready to take on all of the maintenance and repairs a house needs, including unexpected and emergency expenses? Are you ready to settle down and live in the same place for at least a few years to come? Have you paid off your other major debts like student loans before buying a house? Consider the pros and cons of renting vs buying if you’re not sure of the answers for some of these questions.

If you’re still set on buying a house, establish how much you can afford to spend on a home. Again, this is probably one of the biggest chunks of debt you’re ever going to take on. Don’t take this decision lightly or you could go house broke. Being house broke, or house poor, means you’ve spent a larger portion of your income on your home than you should have.

If you’re considering a house already, find out what your mortgage would be, including interest, insurance, and utilities. If you can’t afford all of that along with building your savings and having cash on hand, don’t do it. Let’s continue getting ready to buy your first house by learning how to set up a budget.

How to Set Up a Budget

If you’re considering buying a house, you know you’re going to need a healthy savings. Not only will you need a large sum for your down payment and other closing costs in the home buying process, you might also need to work on paying off some debt too. We’re going to show you how to set up a budget using the money pie.

The money pie is not a new budgeting concept, but it is simple. Basically, the entire pie is your income, and how you split up that pie is how you allocate your money. Here’s a breakdown of how your pie should be split up:

  • 50 percent of the pie should go to living expenses like: rent/mortgage, food, gas, transportation, clothing, etc. Anything that you must buy to live will hopefully take up 50 percent or less of your total income.
  • 10 percent of the pie goes to giving. Whether that means donating to charities, giving gifts, or helping a friend in need is up to you.
  • Another 10 percent goes to your short-term savings. This might also be considered your emergency fund.
  • Another 10 percent goes toward long-term goals such as retirement, starting a business, or a down payment on your first house.
  • Another 10 percent goes towards a different set of long-term goals such as your child’s education fund or your own plans to further your skills and education.
  • Your last 10 percent should be allocated for fun! Whatever that entails for you.

With this formula, you should be able to cover your living expenses and grow your savings in multiple areas without taking away from your spending cash. This is the ideal situation, and it sometimes takes a little time to pay down debts before you can get there, but a budget is your first step.

House Hunt Like a Pro

Now you’re really getting ready to buy your first house. But how do you find your dream home? Too bad there’s isn’t a dream home warehouse around the corner. Here are some tips to help you house hunt like a pro.

First, the two most important aspects to consider when house hunting are what type of house you want to live in and what location you’re looking at. Some types of homes you might consider include:

  • Apartments
  • Townhomes
  • Condos
  • Duplexes
  • Single family homes
  • Large/small homes
  • New/Older homes

Then we could get into the many styles of home options you have like: bungalows, mid-century modern, colonial, mediterranean, ranch, tudor. There are a lot of options out there. You don’t have to know exactly what style you’re looking for (although it’s not a bad idea) but you should know if a condo vs. a single family home will better fit your lifestyle. Also, don’t forget to consider your ideal location and maybe a few backup areas you’d be happy to live in. Knowing the type of home and location you’re looking for will help you determine the price range your looking in and will help you find relevant listings.

The internet is going to be your friend on your house hunting journey. Sites like Zillow.com, Trulia.com, and Realtor.com list available homes for sale and some even provide virtual tours of the home so you can “walk through” before contacting an agent.

Now you’re closer than ever to buying your first house. You’ve weighed the pros and cons, set a budget and saved some money, and now you can begin the fun of house hunting. There’s a lot more to buying a house, of course, but we hope this guide has helped you get a little closer to your dream.