The most expensive thing most people will ever buy is probably a house. Also, paying off a home loan can take as long as forty years and will cost more than the house itself because of the interest. In short, you should not buy a house without giving it a lot of thought. Since the average American stays in their home for less than seven years, most mortgages probably go to people who have already bought a home. But there are always people who are buying for the first time, and it's important for them to understand how the process works.
Here are some tips for people who want to buy their first home:
Figure out how much you can pay. This includes the total cost of the house as well as the monthly payments. Don't be fooled by the amount the lender says you can pay each month. That number is usually high enough to be out of reach for most buyers. If the lender says you can pay up to $2,000 per month, but you can only afford to pay $1,500 per month, that's your limit. You shouldn't buy a house that will cost you more than that.
Check your credit before you buy something. No one wants to be turned down for a home loan because their credit report has mistakes. At annualcreditreport.com, you can check it for free. Get a copy and check the information to make sure it's right.
Find a good lender by shopping around. Different lenders will offer different interest rates and terms, so you should shop around for the best deal. You should also try to find a lender that you feel comfortable with. You will be paying off your mortgage for many years, so find a lender and terms that work for you.
Know how much it costs to close. A buyer may be asked to bring a huge amount of money to the closing. Don't be surprised if, when it's time to close, the lender tells you to bring a $15,000 certified check that you don't have. Find out how much it will cost to close on the loan ahead of time and have the money ready.
Most of these things will seem obvious, especially to people who have already financed a home. But first-time home buyers should know what to expect from the process. If you're ready, the process should go well.
