For the first time in 50 years, we have more renters than ever in the U.S. Almost half of those renters say their biggest regret is not buying a house. If you're interested in buying a new home, it's best to have a plan on how to prepare yourself. Here's the top 5 steps to help you get ready.
1. Don't open any new lines of credit. Opening a new credit card (even if you can save 15% on your purchase) is not a good idea. This could ultimately cost you when it's time to apply for a home loan. What could initially save you a few dollars on a store purchase could end up costing you hundreds or even thousands.
2. Shop around for a real estate agent. You want someone who is familiar with your local market, can help you negotiate the best deal, and has a good track record. It's usually helpful to find an agent who is like-minded and works with your personal homeownership goals.
3. Get certified. Getting a pre-approval should no longer be your first step when buying a new home. We've got something better now—the Churchill Certified Homebuyer program. It's helping homebuyers get offers accepted and providing the opportunity to close faster. This one's a no-brainer.
4. Figure out how much house you can afford. No one wants to be house poor—it's seriously not a fun situation to be in. You want to still be able to live life and have room in your budget for other things. We recommend your mortgage payment not be more than 25% of your take-home pay. Check out our mortgage calculator to start crunching the numbers.
5. Save for a down payment. What if you don't have 20% to put down on a house? Don't sweat it. There's alternatives to the 20% down rule, especially for first-time homebuyers. Many times 5% will do the trick, depending on the type of loan you get. Just be smart about it and make sure you have some money stashed away for an emergency fund (3-6 months of expenses).
As a first-time homebuyer, it's important to not be reduced to an online transaction. Get advice from an expert in your area who will take the time to help educate you about the process and answer all your questions.