Buying a new home for you and your family can be a fun and rewarding experience, but it can also be very stressful. If you are a millennial doing this for the first time, you may not know all the steps involved in the buying process that you need to prepare for. In this article we have provided for you the necessary steps you will need to be aware of and complete in order to purchase your brand new home.

4 Steps to Complete When Buying A Home

Check Your Budget

Truthfully speaking, buying a home is an expensive purchase. It is also a huge commitment, as you will be paying on your mortgage for many years to come. When you start shopping around for a house and for someone to lend you the money, you will find that most institutions will follow what’s called the 28/36 rule. What this means is that property taxes and insurance should not account for more than 28% of your gross income.

Additionally, any outstanding debts (credit cards, car loans, student loans, etc.) should not make up more than 36% of your gross income. We recommend doing the math and pairing these numbers with your budget. If you are not going to feasibly meet the financial demands of owning a house, now might not be the time for you. Also, make sure your credit score is in good shape. Having a good credit score will not only make it easier to be approved for a mortgage, but you may be able to lock in a lower interest rate.

Have That Down Payment Ready

In addition to being financially able to own a home and keep up with the taxes, insurance, and mortgage costs, you want to be sure you have enough money now to pay the down payment for the house.These days, not many lenders are providing 100% finance options on homes. This means that you will be required to make a down payment, which could run 3-20% of the total cost. For example, if your total mortgage is $100,000, your down payment could be somewhere between $3,000 and $20,000.

The more you give the lenders as your down payment, the less your total loan will be, which lowers your monthly mortgage payment. More money put down equals more savings. And more savings equals more freedom.

Prepare for Other Expenses

Further proving the fact that buying a house is an expensive operation, your total mortgage cost will not just be the price of the house. It will include property taxes, property insurance, closing costs, and various other expenses. These costs all work together to determine how much the cost of your entire loan will be, which will also determine your down payment and your monthly mortgage payment.

Keep in mind that there are online calculators to help you determine what all these costs will look like once compiled together, which can help you immensely in the planning process as you begin your search.

Shop Around & Study the Neighborhoods

Do not buy the first house you see. Look at other houses in the area, or in other areas. Compare the pros and cons of each home you look at. If you eventually cycle back to that first house, that is fine, but give yourself the chance to look at every available option before committing.

If you are really interested in a home, it is also a good idea to hire a qualified property inspector. You want to make sure that the home is safe for you and your family. The last thing you need is to move in and find that there is mold, asbestos, lead-based paint, structural damage, or a litany of other possible problems. It is also a good idea to shadow the inspector so you can discuss any issues he finds in real time

Equally as important, study each neighborhood you visit. Especially if you have children. Consider: What are the schools like? Are there playgrounds nearby? Is the hospital close? Are there other children your kids’ ages in the neighborhood? Are they (or their parents) friendly?

Make note of what your route to work would be, or to the store. Are the neighbors friendly or do they give off a creepy vibe. Is traffic speedy or a lifeless crawl?

Remember: before you make your final decision, you want to consider all the details. That includes not only of the house you are interested in, but the surrounding area as well. Buying a new home is as much about choosing where to live as making a choice about what lifestyle you are willing to embrace.

Get Pre-Approved Today

Are you ready to start your search for your first home? Just follow the steps above, and you will be well on your way to being brand new homeowners soon!

Need more information (or guidance)? Want to learn more about getting pre-approved for a mortgage? Contact Fairfax Mortgage Investments today! Our mortgage brokers have decades of experience securing mortgages for clients of all ages, and will assist you in every step of the home buying process.