For many new homebuyers, purchasing a home is an important achievement that nears the top of their lifetime to-do list. Though this experience should be fun and exciting, financial and logistical uncertainties can make it stressful.
But it doesn’t have to be that way.
As the team at Lennar knows first-hand, new homebuyers can take control of the process to keep it streamlined, hassle-free, and avoid typical home-buying mistakes.
If you want to hit the ground running in buying the home of your dreams, this guide highlights everything you need to know before making your first purchase:
1. Improve Your Credit Score
Before beginning your search, take the time to evaluate your credit score and determine if it’s where you want it to be. Because a credit report reveals how you manage your finances, it will be a critical part of finding a home loan with a reasonable interest rate. If your score needs help, determine what’s hurting it, such as missing payments or using too much credit. Then, tackle the problem and strengthen your credit.
2. Think About Your Budget
You should also determine how much house you can afford. The budget should allow you to pay your monthly mortgage comfortably, while leaving room to spend on other bills and save for retirement, or your family’s college education. To help determine your price range, a good rule of thumb is to multiply your annual salary by three and four.
3. Start Saving for the Down Payment
Many experts recommend paying as much as 20% of the home’s overall cost for your down payment, so it’s important that you start saving as early as possible. This will allow you to take out a smaller loan, which translates to lower monthly payments. Plus, you’ll save more money in the long run, enjoy increased equity, and avoid having to pay mortgage insurance–which is required when down payments are smaller than 20%.
4. Prepare for Anything
Life happens – and being prepared to handle anything it throws our way is critical. Set up a special savings account and transfer a fixed amount to it every month. This way, you won’t have to dip into your home savings to handle a broken down car or unexpected medical bill.
5. Get Pre-Approved
Before making an offer on your dream home, you should reach out to a lender or mortgage broker for pre-approval. Not only will this process help you nail down that pesky budget, but it will encourage a seller to consider your offer over that of someone who hasn’t been pre-screened.
6. Know Your Needs
Purchasing a home is a significant investment and long-term commitment, so it’s important that your choice fits your needs and lifestyle. Consider your ideal location, including whether you want to live in a quiet suburb or on a bustling downtown address. Think also about the type of home you want and must-have features.
7. Decide on Ground Rules
If you’re buying a home with another individual – whether they’re your spouse or business partner – you need to have ground rules in place before the purchase. Discuss how ongoing payments should be handled, what the ownership percentage will look like, and what you’ll do when one person wants to sell.
Celebrate the prospect of purchasing the home of your dreams by being prepared! At Lennar we have a team that can help answer your questions—and get you financing—so let us know how we can be of assistance! With many gorgeous communities, offering different home designs, amenities, locations, as well as great value, a new Lennar home is sure to surpass your expectations. Before you know it, you could be throwing a house warming party in your own beautiful space – and we’d love to help you achieve it!