Know What You Want
The most important first step when setting out on your home buying journey is to determine what your long term goals are, and figure out how home ownership fits those goals. Make a list of your must have characteristics, from basics such as size and neighborhood, down to smaller details and desires such as kitchen layout and appliance quality. If you have a clear picture of the specific features your ideal home has to have, it will make the process of searching for a home much easier. Another thing to consider is whether you are willing to invest time and money in your house once you buy it. If you are, it may make sense to buy a fixer-upper for a significantly lower nominal price.
Do Your Research
When searching for your ideal home, be sure to take advantage of all the tools at your disposal. This means diversifying your home hunting strategies. Use the services of a real estate agent, drive around neighborhoods you like looking for “for sale” signs, and ask around with family, friends and even business contacts. You never know where a good house lead will come from, so it pays to put out a lot of feelers. The key is not to put all your eggs in one basket. Another area in which it pays, quite literally, to do your research is in government subsidies and other financial programs for first time home buyers. Ask around, the government might actually save you a significant amount of money.
Can You Afford It?
Let’s assume you’ve completed the first two steps, and actually found a property you wish to buy. This is where your emotions can get the best of you, and you definitely do not want to buy a home that you ultimately cannot afford. A rule of thumb that is widely accepted is that you need to have 5 to 20% of the cost of the house in your savings. The more you have saved, the easier it will be to apply for cheaper mortgages, and you will have a wider array to choose from. Your mortgage payments, however, are not the only expenditure you will encounter. You must also factor in survey costs, building insurance, mortgage valuation and arrangement fees, removal costs and many more. There is always a chance of unforeseen expenses: you might have to change the roof, or the water heater might break. That is why having an emergency fund for such occasions is highly advisable.
There are countless factors to consider when taking this significant step in your life. The most important piece of advice is to take your time, and apply rational thinking. Just because a house “speaks to you”, does not mean it makes financial sense to purchase it. You shouldn’t buy a house if you ultimately won’t have the means to pay it off. Take your time, do your research and try to have fun. Good luck house hunting!