There's a first time for everything. Which wouldn't be so bad, except it's really hard to get something right the first time. If it's baking a cake, no sweat. You can just do it over if you mess up. If you're buying a house, though, you get one shot. We're here to help you get it right!
First things, first, do the math. How much can you afford to spend monthly on housing? How much can you afford to spend up front? Don't lie, honesty is important here. If you can only afford $600/mo, but you think you can afford $800/mo, you're setting yourself up for trouble! Figure out a budget range, going from what you can spend comfortably to what would stretch you thin.
Tip: If you need a guideline to get you started, most experts recommend not spending any more than 30% of your income on housing costs.
Then do some more math. Who says you won't use algebra in real life? Take that spending range you just worked out, then figure out how much that means you can afford to pay for a house. This can be a bit complicated because you need to include:
- down payment
- closing costs
- monthly insurance
- mortgage payment
To make sure that you can afford the home of your dreams, go ahead and check your credit. You don't need any surprises! If everything checks out, take those numbers and other financial documents (like pay stubs and W-2's) and head to some banks. See what your options are and shop around for your lowest interest rates. Your goal is to get pre-approved for the loan you'll need. This lets you house-hunt with confidence. Bonus? It can give you a leg up in your closing negotiations (when you get there).
You've got your budget, you've been pre-approved for a loan, now you get to start the fun part! Finding the perfect home is a matter of patience and persistence. What features can you live without? Which ones are deal breakers? By knowing what you want, you can save a lot of time you might spend looking at houses that aren't right for you.
Finally, don't forget to plan ahead. Are you planning on getting married? Do you want to have kids? Or maybe you'd like to work from home at some point. If you're accustomed to renting, then it may be hard to remember that you can't just bounce somewhere new after a year. Buying a house is a big commitment, so don't settle.
Just remember that there is a reason you did your budget first—no matter how amazing a house may be, it's never worth potential bankruptcy!