Important Steps for First-time Homebuyers

It's a great time to be a first-time homebuyer.  Interest rates are low, inventory is booming, and there are government incentives to help you buy.  If "purchase home" is at the top of your priority list, this is the time to do it.

Timing is everything when it comes to a buying a new home.  The right mortgage, location, and property-all these pieces need to fit together for the purchase to be successful.  Here are some important steps to follow as you begin your quest.  They apply to everyone, from the veteran property owner to the first-time homebuyer.

Financial housecleaning

If there's any lesson to be learned from the recent months of financial crisis, it's that over-extending yourself can have disastrous results.  Before you make a call to a realtor, or even look at the housing section in your Sunday paper, get a good idea of exactly what you can afford.  Analyze your monthly budget. Calculate what you'll have left over for a mortgage payment after buying groceries, saving for retirement, and handling daily expenses.  Give yourself a generous cushion; your mortgage payment shouldn't exceed 30 percent of your gross income.

Check your credit and get pre-qualified

You've determined what you can afford to spend on a new home, but will a lender agree?  It's a smart move to get yourself pre-qualified for a mortgage before you go house hunting.  Obtain a copy of your credit report to make sure that there aren't any errors, which can lower your score.  Then, get quotes from several lenders to see who has the best mortgage package.

Prioritize your needs

It's easy to visit a new home and fall head-over-heels in love with it.  The key to making a smart buy is to avoid that kind of emotional infatuation.  You can avoid it by getting pre-qualified for a specific purchase home mortgage amount, and then listing your priorities for a new home.  If you're looking at a place that has a spectacular fireplace, but you've listed "screened porch" as a must, the reminder could help you avoid making a knee-jerk decision.  Remember your priorities.

Cost checks

Even though there may be a lot of inventory on the market, your priorities list should shorten your shopping time.  Try not to make this a long, drawn out process.  These low rates and ample inventory won't be around forever.  

When you've found the right home, factor in all the costs that will be included in your monthly housing expenses.  Don't forget homeowners insurance, the mortgage payment, home maintenance, and utilities.  

The market has never been better for a first-time homebuyer.  With extra inventory from sea to shining sea, and purchase home mortgage rates at record low levels, it's the ideal time to scoop up a new home.  Even though it's a buyer's market, you need to follow fundamental rules that apply to every first-time homebuyer.  Be opportunistic, but also be smart in the process.