Buying a home is (usually) the largest, and longest financial commitment of one's life. In a world of impulse-buy-oriented consumerism, a house purchase should be the least impulsive, most well-thought-out investment of your hard-earned money you make. You need to do your homework and get a really good understanding of the debt-to-income ratio your finances represent, the budget you can afford, as well as the associated costs you will have to deal with: closing, moving, maintenance, insurance, etc.
Here are three things to consider before you go house-shopping.
What's your Credit Score?
Unless you're independently wealthy, you are going to have to borrow the money to purchase a home. And to do that, you need good credit. The better your score, the better your opportunities for a favorable loan with good terms. Know your current score, and know where you need to be before you start talking to lending agencies.
Prepare a Down Payment
A down payment of 20% of a home's purchase price can put you in a much better position with the mortgage company. While there are a few ways to get the money for a down payment, nothing beats good old ahead-of-time saving. Also, different types of mortgage have different down payment requirements so you may not need as much as you think. Start setting aside money now, if you haven't already. This can keep you from having to borrow, taking it from your retirement account, or going in with a low down payment and having to pay for mortgage insurance.
Hire a Real Estate Agent
When you're ready to start looking, hiring a buyers' agent is one of the best financial moves you can make. A real estate agent is dedicated to finding the right home for you, negotiating on your behalf, and helping you navigate the sometimes turbulent waters of the housing market. The professional know-how of a buyers' agent will save you hassle, mistakes, and money.