Buying a home can be challenging. In fact, the process can be overwhelming, especially for first-time buyers. The chief source of home-buying anxiety is a result of knowing that it is often the largest financial transaction of your life. –You don’t want to make an expensive mistake. But, the buying process can be made far more manageable – as well as financially safer – if you take the right initial steps. So check out this brief guide to where to start when buying a home in Westfield, Cranford, Clark, Scotch Plains, Fanwood and Mountainside Areas.
Take a Hard Look at Your Finances
Your first step toward buying a home in Westfield, Cranford, Clark, Scotch Plains, Fanwood and Mountainside Areas should be to take a close and hard look at your finances. A careful audit of your financial situation will let you know whether you are ready to make a move. So before you even start looking at listings, take stock and consider your budget.
First, consider your savings. According to financial experts, you shouldn’t “even consider buying a home before you have an emergency savings account with three to six months of living expenses. When you buy a home, there will be considerable up-front costs, including the down payment and closing costs. You need money put away not only for those costs but also for your emergency fund. Lenders will require it.”
You also need to review your monthly expenditures and spending habits so that you can know exactly what you spend each month and where. This assessment will tell you how much you can allocate to a mortgage payment. You need to make sure you account for everything including utilities, food, car maintenance and payments, student debt, clothing, kids’ activities, entertainment, retirement savings, regular savings, anything you spend money on.
And then you need to look at your credit, debt-to-income (DTI) ratio, and payment history. You will need at least the minimum required credit score, a maximum DTI (Debt To Income) ratio of 43%, and a history of paying bills on time.
Determine the Type of Home and Features You Want/Need
Once you’ve reviewed your financial situation and made sure that you really are in a position to make buying a home feasible, it’s time to think about what you want and needs in your new home.
This means first figuring out what type of home will best meet your needs and suit your lifestyle. “You have a number of options when purchasing a residential property: a traditional single-family home, a duplex, a townhouse, a condominium, a cooperative, or a multifamily building with two to four units. Each option has its pros and cons, depending on your homeownership goals, so you need to decide which type of property will help you reach those goals.”
Next, you need to consider the features you need and want. A good way to proceed is by compiling a list of must-have features and a wish list of like-to-have features. You’re likely making perhaps the biggest purchase of your life, and the goal is to have that purchase fit both your needs and wants as closely as possible. Your list should include basics, like size and neighborhood, as well as smaller details like bathroom layout and a kitchen wish list.
We can help you assess home types and features in Westfield, Cranford, Clark, Scotch Plains, Fanwood and Mountainside Areas. To find out more, just call 917-608-7277.
Find Out How Much You Can Borrow and Get Pre-approved
Your next step toward buying a home in Westfield, Cranford, Clark, Scotch Plains, Fanwood and Mountainside Areas involves the mortgage. Primarily, this means finding out how much you can borrow and getting pre-approved. We can help connect you with a great local lender.
Before you start shopping, it’s important to get an idea of how much a lender will give you to purchase your first home. You may think you can afford an $800,000 home, but lenders may think you’re only good for $750,000 based on factors like how much other debt you have, your monthly income, and how long you’ve been at your current job.
You need a pre-approval to be perceived as a serious buyer and to have more negotiating leverage, you should get pre-approved for a mortgage. Pre-approval ensures that you can get the mortgage (barring any financial changes) and exactly how much you can borrow. It’s an important step because many sellers “will not even entertain an offer that’s not accompanied by a mortgage pre-approval.
Calculate What You Can Actually Afford
But just because you can borrow a certain amount, doesn’t mean you should. So before buying a home, you also need to calculate what you can actually and comfortably afford.
“Sometimes a bank will give you a loan for more house than you really want to pay for. Just because a bank says it will lend you $600,000 doesn’t mean that you should actually borrow that much. Many first-time homebuyers make this mistake and end up ‘house-poor’ with little left after they make their monthly mortgage payment to cover other costs, such as clothing, utilities, vacations, entertainment, or even food.”
Please keep in mind that the monthly mortgage payments are not the only expenses involved in buying a home. You’ll have many other recurring expenses such as property taxes, homeowners insurance, utility bills, the cost of maintenance and repairs.
Hire a Westfield, Cranford, Clark, Scotch Plains, Fanwood and Mountainside Areas Agent When Buying a Home
Another great place to start when buying a home is with an experienced, local Westfield, Cranford, Clark, Scotch Plains, Fanwood and Mountainside Areas agent like us . A good agent can help you find a home that meets your needs and is within your price range, as well as assist with all the paperwork and negotiating the best deal possible. In fact, in today’s real estate environment, a good agent is right next to indispensable – and we have the agents you need. So if buying a home is your goal, be sure to contact us today at 917-608-7277.