Buying your first home is a huge step. It can be both terrifying and rewarding experience with so many upsides. There’s nothing like the feeling of knowing that your home is yours as you create memories and build equity at the same time.  Not to mention, the freedom to customize your space and create a space you love.

If you’ve never purchased a home before, navigating the home buying process can be tricky and sometimes overwhelming. Knowing the basics of home buying can be just what you need for a little of peace of mind as you begin the journey to homeownership.

Questions to ask before buying your first home

Is this a smart investment?

Purchasing a home is not just securing a place to stay… it’s also an investment.

Do your research before getting started. It’s easy to look at mortgage calculators and get excited about what they say you can afford in a home. But be cautious, consider all associated costs – the upfront and recurring costs that come with homeownership. Upfront: closing costs, down payment and moving expenses. Recurring: HOA fees, home maintenance, and property upkeep.

In general, buying a home is a solid investment, but the real estate market isn’t always on an upward trajectory. 

Home values appreciate over time and you are able to build equity with each mortgage payment. However, dips in the housing market do happen. The economy could take a turn for the worst. Some communities may not appeal to current home buyers or different home designs may go out of style. On the other hand, resale value tends to go through the roof when the economy is growing. Just remember that buying a home is a major investment and like with any investment there is some risk involved.

Tip: Plan to live in your home for at least 5 years to see the benefits of accumulated equity.

How much home can you really afford?

If you want to truly enjoy your home… make sure that you can comfortably afford it before you buy it.

Take time to sit with a mortgage broker and explore how much home you can afford and what the monthly payments will be for that amount. Just because you qualify for a $225,000 homes, doesn’t mean you’re okay with the monthly payment associated with that home price. Base your price range on a monthly payment that fits your budget and stay firm to that amount.

You also need to be prepared for the down payment and to pay your mortgage closing costs. Which means you need to have a strong savings account. Your down payment amount will depend on your personal preference and your loan criteria. For example, you may choose a loan program that requires you to pay a 5% down payment – you may want to put more down on your home to reduce monthly costs, and that’s okay too. Closing costs typically range from 3 to 6 percent of the purchase price of the home. These costs can also vary based on your loan program… and if you’re able to negotiate with the seller to cover some of the costs.

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3 Tips for being ready for the mortgage process

1- Know your numbers 

Buying a home is not a one-time investment. Know how much you afford… even if things get rough. Purchasing a house is not like renting, you won’t be able to pay a penalty and break your lease.

2- Prepare your credit

Your credit history plays a huge part in the home purchase process. Know what’s on your credit reports. You can get all 3 of your credit reports for free annually, using If you check your credit and you find that there are errors dispute them immediately. Also know that your debt-to-income ratio will matter as well, be sure that your accounts aren’t maxed out and that you have positive repayment history.

Tip: If there are collection agencies listed on your reports, you may be able to negotiate a settlement on the amount owed. Try writing a hardship letter to the agency to see if they’re willing to work with you. Check out the article if you’re not familiar with the process: Writing A Hardship Letter Collection Agency

3- Have documentation readily available

Much of the dilemma when going through the mortgage process is associated with the getting the paperwork together. Get ahead of the process by getting your last 2 years of tax returns (including w2’s), rental history and employment verification, bank statements, 401k or retirement documentation and any information regarding items on your credit report that you are disputing. Most of these documents can be found online so you may not need to request them but you will want to be familiar with how to access them.