Homebuyers must prepare well to acquire their dream home

If you are in the market for buying a home, then prepare well before taking the plunge. The process of home search might be easy, but to match it with your overall needs and budget can be tough while navigating through the real estate market can be overwhelming at times. Suppose you are looking for new homes for sale in Calgary. In that case, the first task is to appoint a reliable real estate agent who can hold your hands throughout the process to ensure a comfortable closure of your chosen property.
But there is much more to home buying than just finding out the most suitable property with help from the real estate agent, especially if you are a first-time homebuyer. Depending on the demand, you might see homes removed from the list in just three weeks as it is now happening in Calgary, which might drive you towards making some impulsive decisions. The decision can have far-reaching implications because it can upset your financial goals and keep stretching the mortgage payment till retirement, something that nobody wants.
Staying well prepared with your finances will put you in good stead when you are buying a home, whether for the first time or making a repeated purchase. Here is how you can get going for a comfortable home buying experience.
Build an emergency find and pay off all debts
Even if your monthly mortgage payment is equal to the rent you are currently paying, the overall investment in home buying is quite high and could be the most expensive purchase of your life. Even after buying a home, you must pay for maintenance and upkeep to retain its attraction and support your lifestyle, and the costs can quickly add up to a considerable amount for which you must be ready. Ideally, before you buy a home, pay off all your debts and create an emergency fund to meet the recurring expenses for up to 3 to 6 months.
Since you have kept money aside for making monthly mortgage payments, the emergency fund will help meet any additional expenses after going to your new home without disrupting your lifestyle. Now that you are debt-free be firm about staying within your budget when shopping for a new home.
Consider your affordability
When creating your home buying budget, consider your monthly expenses to establish the maximum amount you can spare for mortgage payment which determines your affordability. Remember that your budget will include some other expenses besides the mortgage payment, and the spending for housing should not exceed 25% of your monthly take-home pay. Even if your preapproved mortgage is much higher, do not step out from the limit you have set, or else it can prove detrimental for your future finances.
Save for down payment
Plan early in your life about buying a house and start preparing by creating a savings account with a fixed amount keep aside every month, building a corpus after some years, which you can use to make a down payment. It will save the cost of paying for Private Mortgage Insurance (PMI) later, which is usually 1% of the loan amount. If your savings fall short of meeting the down payment of 20%, avoid the temptation of single-digit down payment offered by some sellers or lenders. Go for a 15 years conventional fixed-rate mortgage with a 20% down payment and avoid the lure of Adjustable-rate mortgages (ARMs), FHA Loans, and VA loans, as these are all costly in the long run.
Save for closing costs
Closing costs are in the range of 3%-4% of the property price, and you must save the money to pay from your pocket. Your lender will tell you about the approximate money involved so that you come prepared on the closing day. The cost includes homeowner’s insurance, home inspection, appraisal, credit report, and attorney’s fees.
Obtain pre-approval for a loan
Once you are ready to put in your savings to pay for a 20% down payment as well as the closing costs, you are close to realizing your dream of buying a house by borrowing 80% of the property cost. Before you start the home search, get pre-qualified for a loan and obtain the letter of pre-approval so that you are sure that all finances are in place. A pre-approval is an assurance to sellers who take you seriously as you make your intentions of buying clear.
During the pre-approval process, the lender verifies your financial documents and submitting your loan for preliminary underwriting. If you attain the debt-free state as described earlier, you must look for a lender who agrees to give a loan without referring to the credit score, which is a great way to encourage first-time home buyers.
Search for a home within your budget
Having arranged for finances, you can now start searching for homes with assistance from real estate agents or online resources. If you find some suitable homes online, route them to your real estate agent that gives them a better understanding of your requirements, style, and taste. They can use the information to search for homes in a Multi Listing Service (MLS) that meets the criteria set by you. Real estate professionals heavily rely on MLS to serve their clients by giving access to a large pool of properties available in the market at that point in time.
Consider the neighborhood
Besides finding a house that fits into your budget, consider the neighborhood, too, as it is critical to ensure healthy living by supporting your lifestyle needs. How far the grocery stores, pharmacies, schools, and community markets are and how close the place is to the main transit routes are all important factors. Gather information about the crime rate in the area to gauge the level of safety. Consider the distance that you have to commute every day to work. The traffic conditions and the surrounding landscape are the other things to consider.
Take a long-term view of the house as well as the neighborhood to understand how well it can support your future needs as the family would evolve through the years.

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