Your Path to Home Ownership
Are you thinking about buying your first home? Buying a home can be an exciting prospect but can be difficult if you aren’t adequately prepared.
The Montana Board of Housing encourages all potential homebuyers to take a First-Time Homebuyer class to help determine if it is the right time, personally, for you to buy a home.
Is buying a home the best decision for you?
Home ownership offers clear advantages for some families: tax breaks, money going toward equity for you rather than your landlord, and the ability to decorate and remodel your home as you like. But owning your first home can also offer challenges, particularly if you buy a house before you are ready. You usually need to make an initial investment in the form of a down payment; you will have to bear the cost of maintenance and repairs; and you will have to sell your home, which can often take months, before you can move. Weigh the pros and cons carefully before deciding if homeownership is right for you now.
Are you financially prepared for homeownership?
Analyze your finances to not only determine if you can afford to buy a home, but to ensure that you will be able to pay for other related costs, including maintenance, repairs, utilities, and, in some communities, homeowner’s association dues. If you feel that you can afford a home, the next step is to review your financial picture. Specifically:
- Check your credit. A poor credit report can cost you tens of thousands of dollars in interest over the life of your home loan or can put you out of the housing market altogether.
- Pay off or down as many debts as possible.
- Do not take on any new debts. Buying a new car a few months before trying to buy a home could result in your not being able to afford a home.
- Begin gathering financial documents that you will need when you apply for a mortgage, including the last three years of income tax returns, current paystubs, records of any negative credit history that has since been paid off, and records of any supplemental income and savings you may have.
- Know exactly how much house you can afford. Once you begin the process, you may find that you qualify for a lot more house than you thought. That doesn’t mean that you should buy the most expensive home you qualify for. Only you know what your regular living costs are and what lifestyle you want to have. Don’t fall into the trap of overspending on your first home and becoming too “house poor” to enjoy it.
Do you understand the home buying process?
Do as much research as you can about the different types of mortgages available. Learn what to avoid when applying for a mortgage, such as predatory lending practices. Many real estate agents, lenders, local governments and nonprofit agencies offer seminars for first-time home buyers. If you find one in your area, take advantage of it. Not only will you learn the ins and outs of home buying, you may make some valuable contacts for when you are ready to begin the process.
