Buying and owning a home is an essential part of the American Dream, but the process can be daunting for those who have never done it before. The world of homeownership can be a complex one, and the road to getting there can be difficult. While purchasing a house can be one of the most exciting and rewarding events of a person’s life, it can also be one of the most stressful and frightening.
The complicated nature of buying a home has caused many young people to postpone homeownership, and some have never even considered the idea seriously, preferring to stick to the simple, uncomplicated process of renting. But buying a house is more than just an investment or even a smart financial move; it can be a rite of passage for young Americans on the road to independence and adulthood.
There are countless benefits to owning a home and just as many reasons why a young person would want to. Whether it is a matter of financial stability, family growth, personal independence or any other number of potential advantages, you certainly have your own reason or combination of reasons for doing so. But while buying your first house can provide a number of financial and personal benefits, going about the process incorrectly or without proper preparation can have many long-term repercussions that could set you back significantly for the foreseeable future.
A Purchase Unlike Any Other
The importance of proper education and preparation in home buying cannot be overstated. At all times, you must remember that buying a house is not like buying anything you have ever purchased up to this point. You must plan, save and strategize for months or even years before you will actually be able to sign the papers and move into your new house.
While shopping for your first home and moving your family into it can be some of the most memorable and meaningful events in your life, the processes before the actual buying are the most important steps. It is important that any first-time buyer understands the order of these processes and ensures that he or she is moving in the right order.
With most purchases, you would shop for the item then take the necessary steps to buy it. But when buying a home, you must essentially do the process in the reverse order, securing pre-approvement for your first time home buyer loan, then actually shopping for a house. Failure to do so could mean that you lose out on your dream home because another family already had a mortgage lined up before choosing the home and making an offer. It can also lead to rushing the process unnecessarily, which is obviously never good for any major financial move.
Assess, Plan and Save
Chances are, you will need to save more for a down payment on a house than you have ever had at any previous time in your life. The amount can vary greatly according to the type of loan, the lending institution and obviously the amount of the loan, but most mortgages require a down payment of between 3.5 and 20 percent of the home’s total cost. It will likely take months or possibly years to save this amount, so you should not plan on buying a home in a small timeframe.
You will also have to make the most thorough and honest assessment of your finances that you have ever made. Fooling yourself into thinking you can afford more than your really can, cutting corners when assessing your finances or making unrealistic predictions for the future will only hurt you. Since there will always be unexpected expenses and unforeseen variables for first-time buyers, planning conservatively in all your calculations will put you in the best position.