Buying a home is not the same as buying a new couch or TV – or even a car. It takes a lot of planning, both emotional and financial. Whether you are a first time buyer or a move up buyer, you need to decide what is right for you and your family.
Why do you want to buy? That is the emotional part of the equation. If you are a first time homebuyer, it may because you want a home of your own, a building block, something that you can call your own. Some people want to be able to do yard work, some want a townhome so they do not have to do yard work! Some people want to be able to decorate their home their way – not limited to restrictions by a landlord. Some want the potential gain in equity.
Are you financially ready to buy a home? This is the financial planning part of the equation. You need to know if you are financially ready to buy. How much home can you afford? Is your credit in good shape? Do you need to pay off some debt to qualify for a home? Do you have money saved up for a down payment? You will need money for your down payment (typically at least 3.5-5%), plus closing costs and reserves. Reserves are usually at least 2 months of house payments to help cover any unexpected expenses. You also want to make sure you have money set aside for any repairs or changes you want to make to the home.
If you are going to sell your current home and buy a new home, you need to get your current home ready to go on the market. Do you need to make repairs? Do you need new carpet and paint? How much equity do you have in your home? These are questions that your realtor can answer and help you guide you through what is needed to sell your home.
How much will you qualify for in your new home? How much do you need for a down payment? What type of loan can you qualify for? These are questions that your loan officer will answer.
Having a reputable realtor and lender can really help you answer these questions and decide what is right for you. Ask questions and make sure you understand the answers. Once you have decided that it's time to buy, your realtor and lender will help guide you through the process. Have fun with the homebuying process – I know it can be stressful, but it can also be a very exciting time!