Thinking about your first home purchase can be extremely exciting but you should have all of the facts and relevant information in order to capitalize on this experience. Buying a new house brings up a lot of questions for you. You may have many different concerns as you approach the process of buying a new house, especially if you have recently graduated from college. Here is how to get ready for that all-important purchase:
Use a Checklist
Whether you are an experienced owner or a first time homeowner just out of college, you need to look at a couple of different checklists in order to be sure you have everything you need. For example, you want to be sure about what matters in a home purchase outside of getting a home at its resale value and the kind of savings that you will need to have set aside in order to conduct this purchase.
Know Your Credit Score
Being aware of your credit score can help give you an indication of what you might be qualified for in terms of getting a new home. Services like Credit Karma can help you with this. You should always do this research ahead of time so that you are not disappointed to find out that your credit score means that you cannot obtain that dream home you have been eyeing for the last couple of weeks.
Consider Your Debt to Income Ratio
There are many different rules you can consider when you think about amount of home that you can afford. When you are using FHA financing, for example, as many as 1/5th of buyers get loans insured by the FHA. This means that the mortgage payment cannot exceed more than 31% of the monthly income. In some certain situations this can be higher but you should also think about how much of your income you want to be directing towards housing on a regular basis.
As a recent college graduate, you may be concerned about other factors like paying off your student loans as well. Make sure that the ultimate size and cost of the home you obtain is well in line with what you can afford. Getting underwater on a mortgage can make life very difficult for you, so it’s better to start small and commit to a mortgage than you can manage over the long haul. Work with your real estate agent to find something in your budget with the other requirements you have in a new home.
Save For the Down Payment as well as Closing Costs
It can be an unfortunate surprise to realize that the down payment requires more savings than you have set aside. Likewise, the closing costs can come as a disappointing reality far too late in the process. Make sure you have funds already set aside in order to help manage this before you even begin looking for a home. Having a clear budget and guidelines can help make this process of obtaining your home much easier.