Many Americans dream of owning a home, which is why the homeownership rate in the United States remains high. At the pandemic’s beginning, more than 30% of people who bought homes were first-time buyers.
Buying a home can be an exciting step in your future. In fact, homeownership is a long-term investment that can signify financial security and stability.
However, you may not know where to begin if you’ve never bought real estate. Thankfully, the process doesn’t have to be overwhelming if you learn the 7 steps to buying a home first.
That’s where this guide is going to help. So, if you want your part of the American Dream, keep reading.
Step 1. Determine Your Budget
The first thing you should do when you want to buy a house is to determine how much you can afford. Once you know how much you can spend, you can proceed with the next step in our 7 steps to buying a home. However, when calculating your budget, there are several things you need to include, such as:
- Income
- Debts
- Savings
- Insurance
- Taxes
- Down payment
- Closing costs
Step 2. Research the Housing Market
To know how much you should spend, it’s wise to research the housing market first. This research will help you understand how much homes cost in 2023. Knowing how much real estate is selling for will help you know what size property you can afford.
Step 3. Consolidate Your Debt
When becoming a first-time homebuyer, it’s wise to try to consolidate your debt before making an offer. If you have a mountain of debt, it can make it incredibly difficult to qualify for a home loan or apply for a mortgage. If you have several debts, try to pay off the ones with the highest interest first.
Step 4. Increase Your Savings
When you know you want to buy a home, it’s time to focus on your savings. This step in our list of 7 steps to buying a home is vital because this is the money you’ll use for the down payment required by the bank. The more funds you put into the deposit, the less you’ll need to repay.
Step 5. Improve Your Credit Rating
If you’re wondering if you can rent to own with bad credit, there are rent-to-own programs that are more lenient with credit scores. However, most banks will be more strict and require a good credit score before loaning money. You can improve your credit score by:
- Opening accounts linked to the credit bureaus
- Paying your bills on time
- Keeping your credit use rate low
Step 6. Hire a Realtor
Step six in our list of 7 steps to buying a home is to hire a realtor. Enlisting the help of a real estate agent can benefit you in several ways.
They can help you find homes in your price range, arrange viewings, and negotiate an offer. The seller generally pays the realtor fees at closing.
Step 7. Make an Offer
The final step when finding your dream home is making an offer. If you’ve found a home that meets your needs and fits your budget, it’s time to prepare an offer and negotiate with the seller. Again, this is where a realtor can assist, so it’s worth hiring one.
7 Steps to Buying a Home: Revealed
Becoming a first-time homebuyer doesn’t have to be a pipedream if you follow these 7 steps to buying a home. With thorough planning, you can own your dream home in no time. Increase your savings, decrease your debt, improve your credit rating, and hire a real estate agent, and you’ll be well on your way to making an offer.
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