Taking that first step on the property ladder is an exciting but nerve-racking venture. Perhaps you’ve spent the last few years living with your parents so you could afford a down payment, or maybe you’ve been watching your savings stack up for a long time, and now you’re keen to invest them in a home. Before you’re handed the keys to your first property, however, there are several points to consider. Here are four things you must do when preparing for home ownership.
Get Credit Worthy
Before you even think about buying your own home, you need to straighten out your credit score. You can check your credit reports online, but it’s best to talk to a mortgage advisor about your likelihood of being approved; this is called a mortgage preapproval.
Generally speaking, if you’re credit score is above 700, you have a good chance of being approved. If your score is below 660, you may still get a mortgage; you’ll just have to pay higher monthly fees or offer a more substantial down payment. A score above 750 will get you the best rates on the market, so spend some time working on improving your credit if you can.
There’s no point looking at houses in expensive districts if you know you can’t afford to live in one. While we’d all like to live in a large, modern home in a central location, our budgets don’t always match our tastes, so it’s important to be flexible.
Be realistic about what you can afford and figure out your budget before you start shopping around. As a general rule of thumb, your monthly housing payment shouldn’t exceed 31 percent of your income. If you’re not sure what you can afford, you can use an online home affordability calculator or speak to a mortgage advisor.
Find a House You Like
This is the fun bit. Once you know you know what kind of house you can afford and where you want to live, you can start shopping for real estate. Spend time researching your options, and think about the architecture of a property as well as your desired neighborhood. For example, would you rather live in a mid century modern property or something more Victorian?
There are pros and cons to different housing types and styles, so it’s important to do your research on a place before you move in. You should also hire a surveyor to determine much work the house will need. This way, you’ll know straight up whether you have room in your budget for any necessary renovations.
Don’t Make Assumptions
Whatever you do, don’t make any moving plans until you know your sale is going ahead. It’s tempting to start boxing up your possessions and give notice on your rental place when your offer gets accepted, but you shouldn’t get your hopes up until those keys are practically in your hand. The dream is to find the perfect home at the bottom end of your budget that completes without any hassle or complications, but this is rarely the reality. It’s sensible to make some preparations, but you should know that there is always a chance the seller could pull out.