Buying your first home is an exciting experience. At the same time, it is easy to become overwhelmed and confused by the whole experience. By having a better understanding of what to expect as you buy your first home, however, you will significantly increase your chances of enjoying a smooth buying process. To that end, here are a few things to expect when buying your first home.
Step #1: Start Saving
In order to increase your chances of qualifying for a loan with a good interest rate and to keep your monthly payments at a minimum, it is in your best interest to put a large down payment on your home. Ideally, you should have enough saved up to pay 10 percent of the cost of the home. At a minimum, you will need to have enough saved up to place a hold on the home in the form of earnest money.
Step #2: Plan Ahead
Before you even start your search for a new home, you need to be sure you are ready to take this huge step. First, take a closer look at your budget to make sure you are financially prepared to purchase and to maintain a home. Next, ask family and friends to recommend experts that can help you in the process, such as a home inspector and a lawyer. Third, consider your lifestyle and the type of home you will need to suit that lifestyle and, finally, research the prices on homes in the neighborhoods where you are considering buying.
Step #3: Determine How Much You Can Afford
The next step in buying your first home is to determine how much you can afford. When making this decision, you will first need to consider how much you will be able to receive from a mortgage lender. Your housing cost to income ratio is one factor that mortgage lenders consider when determining how much they will lend to you. Lenders do not want your basic housing costs, which include your mortgage, property taxes and insurance, to exceed more than 28 percent of your monthly gross income. Similarly, they do not want to see your total debt, which would include your housing costs as well as installment loans, credit card balances that are more than 10 months old and student loans, exceeding more than 36 percent of your monthly gross income.
Step #4: Get Prequalified for a Mortgage Loan
Once you have a clear idea of how much you can afford and are likely to qualify for in terms of a loan, it is a good idea to get prequalified for a loan. Not only will this help you know for sure how much you can borrow, but it will also give you a bargaining chip when it comes time to negotiate a price on the home of your dreams. In fact, many sellers are willing to negotiate a lower price with those who are pre-qualified because they can be relatively certain the deal will go through. In Boston, it’s commonplace for buyers to submit a prequalification or preapproval letter along with their Offer to Purchase.
Step #5: Hire a Real Estate Agent
Now that you have a clear idea of how much you can afford and what you are looking for in a home, it is time to hire a real estate agent. By communicating all of this information to your agent, you should have no problem with finding the perfect home to fit your budget.
Keith Munsell 
