There’s nothing quite as satisfying as being handed the keys to your first home. For many adults, making the jump from renter to homeowner represents an important milestone and serves as the culmination of years of hard work. However, barring an unexpected financial windfall, most of us are unable to become homeowners overnight.
The road to homeownership is a long one, but provided you have a reliable roadmap in place, you’re likely to reach your destination unscathed. Anyone preparing to make the transition to homeowner will be well-served by the following tips.
Make a Checklist of Amenities
For many people, a home represents the largest investment they’ll ever make. As such, it behooves first-time buyers to have a clear idea of what they’re hoping to find before jumping into the house-hunting process. If this is a home you intend to live in for the foreseeable future, it stands to reason that you’d want the property to be as accommodating as possible. With this in mind, sit down and create a checklist of all the amenities you’re looking for in a home. If this list contains an extensive number of items, you may want to rank them by level of importance. Not only will this provide you with a clearer picture of your ideal home, it will help your realtor make informed decisions when selecting properties to show you.
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Get Your Debt under Control
Since most of us are unable to pay the full cost of a home upfront, we turn to mortgages. Rather than purchase a home in one lump sum, mortgages enable us to pay for properties over a period of decades. Mortgages are essentially enormous loans, and you’d be hard-pressed to find a lender who’s willing to take a chance on someone with terrible credit. After all, if you’re unable to keep your existing debt under control, why should you be trusted to keep up with your monthly mortgage payments?
In order to increase your chances of mortgage approval, you’ll need to pay down a sizable chunk of your outstanding debt – or if possible, pay it off entirely. While this may mean waiting a little longer to apply for a mortgage, it will ultimately increase your odds of success. If you’re afraid a certain property is going to be purchased out from under you and you simply can’t wait to apply, consider asking a close friend or family member for a loan. Additionally, to ensure that your credit doesn’t get any deeper into the red, abstain from making large purchases while your application is being considered.
Determine What You Can Afford
Once you’ve gotten a handle on your debt, it’s a good idea to meet with a knowledgeable financial advisor to determine what you can afford. This person will take your savings, credit score, monthly income and long-term earning potential into account when making this determination. A staggering number of first-time buyers invest in properties they simply can’t afford and suffer considerable financial setbacks as a result. To ensure that this fate doesn’t befall you, heed the advice of your financial advisor – even if you don’t like what you hear.
Avoid Changing Jobs
You’re unlikely to find a lender who’s willing to take a chance on an applicant who lacks gainful employment. If you loan money to someone without a consistent income, how are they going to pay you back? That being the case, it is strongly advised that you avoid leaving your current job (e.g. don't quit your job to start working online on a risky new business venture!) during the mortgage application process. This is liable to give lenders the impression that you’re flighty or unwilling to commit, which is practically guaranteed to impact their decision.
Signing the paperwork for your first home can be a tremendously fulfilling experience. When looking for ways to feel like a full-fledged adult, nothing really compares to moving into a home that you picked out and paid for. It’s important to note, however, that first-time buyers are likely to face a number of hurdles on the path to homeownership. Luckily, many of these obstacles can be overcome through persistence and financial responsibility. So if you’re ready to stop renting and become a bona fide homeowner, make sure to put the previously discussed pointers to good use.
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