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June 14th, 2017

What You Need to Know to Purchase a Home (for First-Time Homebuyers)

Buying a home is one of the biggest investments you’ll ever make.

Whether it’s your first home purchase or you’ve done it before, it’s a mixture of excitement and stress.

In order to make informed decisions, you need to have the right resources available to you.

Let’s look at some of the important factors you’ll need to consider in order to get yourself ready to buy a house.

Take renting seriously

Most people rent for a period of time before they buy. But it’s crucial that you’re a smart renter.

What does that mean?

The decisions you make before taking the plunge into the real estate market matter.

You want to protect what you have now as you plan for what you want in the future.

These 5 Insurance Tips for Arizona residents will help you choose the right amount of protection you need.

Part of preparing yourself for buying is following a sensible budget, putting some money away, and preserving or improving your credit.

Unexpected expenses can derail your budget in no time. Renter’s insurance can protect you from the costs of unplanned disasters like fire, theft, or flood.

In addition to renter’s insurance, you should also have:

  • Car insurance. Yes, car insurance is required by law, but it’s worth a reminder that there can be seriously expensive consequences for lapsed coverage. Other than the cost of a ticket, being involved in an accident while uninsured means you have to pay for repairs or vehicle replacement on your own. 
  • Life insurance. If you and your family are working toward the dream of homeownership together, doesn’t it make sense to protect that dream if something were to happen to you?
Get prequalified

When you get to the point at which you feel like you’re ready to throw your hat into the real estate ring, it’s time to take a look at your numbers.

Before you start looking at houses, you need to have a full understanding of your financial situation. For example, you need to know what kind of home you can afford.

It’s recommended that you get prequalified for a loan before you start looking at homes. There’s no sense in getting your heart set on a home that you can’t pay for!

The process of prequalification involves allowing a lender to look at your credit history and your current financial situation.

The lender will then give you a document that details how much you can borrow to buy a home.

Manage your credit

We’ve talked about the fact that a lender will review your credit history and make a determination about how much you’ll be able to borrow based in large part on that history.

Your credit history is a record of how well you have managed your finances over a period of time.

If you don’t have any credit or your credit has been damaged by late payments or even bankruptcy, you’ll have to spend some time repairing it before you can get a home loan.

One way to establish credit or work on fixing it is to ask a bank or a local department store to extend you credit. Think small, like $200 or $300.

Once you have that line of credit you need to use it, but you have to do so wisely!

Make sure that the institution is reporting to the credit agencies and, most importantly, pay your bill on time. This will help you gradually repair your credit score.

What’s next?

You’ve been a smart renter, your credit history is stellar, and you’ve been prequalified by a lender.

Now what?

This is where the rubber hits the road!

Your next step is to find a trusted real estate agent who will spend some time with you, getting an understanding of what you’re looking for in a home.

They’ll be able to guide you through the process of making an offer, drawing up a contract, and finally handing you the keys to your new house!

Peace of mind

An important part of owning a home is homeowner’s insurance.

At Practically Free Insurance, you can count on our expertise to help you navigate the often-confusing waters of homeowner’s Insurance. Call us today!

What’s the scariest part of owning a home for the first time?

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