Almost every first-time home buyer in the country is currently renting a home and quite often wonders, “When should I buy my first home?” or, “Am I ready to buy my first home?” They are both great questions and ones not to take lightly. When you’re ready to take the plunge and finally buy your first home and leave the rental life behind, it may take more effort than you expected. So what do you need to know about buying your first home? There’s a lot! For many, renting is great practice for home ownership. Most of us get pretty good at not damaging a rental property, taking care of small repairs and touch-ups, and making that monthly payment. But, only a few people want to rent forever. When you’re ready to buy your first home and leave the rental life behind you, it may take more effort than you expected to prepare for the home purchase and wrap up your rental affairs.
1. Calculate Your Budget
Start by taking a look at current mortgage rates and calculating what you and your income can afford to pay monthly. This will help you define what your actual budget on your first home will be. If you make somewhere between $30K and $50K a year, your range is likely to be between $100K and $250K but always do your own math before trusting an estimate.
2. Start Saving for a Downpayment
A big downpayment makes for a very affordable mortgage and helps both lenders and home sellers have confidence in your ability to follow through with a successful home purchase. So you want your downpayment amount to be as big as possible. There are first time home buyer programs but typically you’ll want to try to have a 20% downpayment. There are some simple tricks to saving like opening a separate bank account just for downpayment that will help you save as much as possible.
3. Get House-Huntin’
Now that you know your approximate budget and have started thinking financially, make a list of your new home priorities and start the house hunt. Use several sites like Trulia and Realtor.com because each will have a slightly different mix of properties and other information. For example, TRELORA.com has some pretty cool information on real estate agent commissions which can make a big impact on your purchase price.
4. Improve Your Credit Score
Getting your mortgage approved and the best rates will rely on your credit score. You need it to be at least in the 600s and 700s are the best you can get. Raise your score by paying off debts and cycling money responsibly through a credit card by buying groceries and the like on credit, then paying the card in full every month.
5. Begin Cleaning Your Rental Home
Since you’re ready to leave the rental life, chances are that you won’t be in your current rental home for much longer. Save yourself a scramble and start cleaning up now, and not just your personal belongings. Get your vacuum to the edge of each floor and wipe down the walls and baseboards for a truly polished look. Take Windex to everything and start thinking of yourself as ready to move out.
6. Get Pre-Approved
Pre-approval for a mortgage means that the lender is ready to extend a line of credit for a purchase in the near future. Make sure that your budget is real and that you can back up your bids by getting a pre-approved loan or a pending approval waiting for you to find the right house.
7. Purge and Pre-Pack
While you’re still on the house hunt or waiting through negotiations, start sorting and packing. Make a big box for stuff you’re going to give away or sell and a huge trash can for stuff that’s not worth selling. Anything you don’t use daily, consider organizing into a cardboard box or plastic tote and slowly sort unused things out of your every-day environment. This way, there will be very little to pack when the time comes and cleaning will be a snap.
8. Do Little Repairs
As your things get tidied into boxes, you’re sure to notice a few small repairs that need doing. Loose handles, paint chips, and scratched floors can be fixed now before your landlord sees them to save your security deposit. If you hung things up with nails, use epoxy and matching paint to repair the holes. Rent a steam cleaner for a day and go over every carpet in the place until the liquid that comes back is clean.
9. This Lease or Next Lease?
Now it’s time to decide if you can be out by the end of your lease or if you need to sign a new lease. If you are leaving soon, make sure to let your landlord know several months ahead of time that this will be your last lease so they have time to find a new renter. If you’re leaving in the near future, your landlord may be willing to draft a 6-month lease instead of a full year for your next renting cycle.
10. Start House Touring on Weekends
Finally, start touring homes. Hop in the car and check out some open houses. If you’re moving far, schedule a few quick trips to go see homes. If you’re moving close, start booking showings and get a feel for the homes you’ve been researching on the internet.
Following this checklist is a quick and easy way to ensure that you will be ready to pick up and leave renting behind for good nearly the moment you find the perfect home and close the sale. With the rental home clean and most of your things already packed, it should take no more than a few days to start living your new life in your first home.
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Trelora real estate serves the Colorado Front Range and Seattle Metro Area and our mission is simple: full service real estate for a fraction of the cost. When you hire a traditional agent to help you buy or sell your home, you pay that agent 3-6% of the home’s value.
When you hire Trelora, you pay one flat fee rather than a variable commission on the price of your home. You’ll also get best-in-class customer service, a team of expert agents who close hundreds of deals per year, a proprietary technology platform that puts you in the driver’s seat and an average rebate of $13,500 in Colorado and $18,000 in Seattle.
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