First Time Buyers - First Time Investors

Are you looking to purchase your first home, but you don't know where to start? As with every other important decision, the first step is explicit planning.

Research and preparation are two fairly obvious, yet essential steps. Exploring these steps thoroughly will dramatically help to alleviate the stressful transition entailed in a new home ownership.

First, you need to assess your credit. Your credit rating will determine how much interest you pay on your mortgage. Therefore, the better your credit, the less you pay. If your credit needs a little work, then taking the time to improve it before the purchase, will prove cost-effective. Even a small increase in an interest rate, when dealing with homes, can end up costing tens of thousands of dollars over thirty years and more.

You can improve or maintain your score by simply paying your bills on time and using your credit wisely. The key is to have less credit than you can afford. A poor credit rating may result in a rejection for your mortgage.

The next thing you will need to consider is saving money for expenses such as: a down payment on your home, closing costs, and repairs and maintenance. One strategy is to start a savings plan to help you handle the financial burden of owning a home and ideally be prepared with more money than necessary in your savings account in the event that there are extra, unforeseen expenses.

Create a budget to help you accurately predict how much you can afford on housing expenses monthly. A budget is simply an accounting of your income in relation to your expenses. Online calculators can give you a general idea of what an acceptable housing expense should be, but only you know what you spend each month, so look to your own spending habits when determining a final figure.

There is far more to owning a home than a mortgage payment. You will face property taxes, utility costs and hookup fees, maintenance, moving expenses, closing costs, homeowners' insurance and private mortgage insurance. These expenses can add up quickly and will hurt if you aren't adequately prepared for them.

You should also consider any additional financial increases that could occur from your new home. For example, you could be further from work, thus increasing your fuel expenses for commuting. If you purchase a condo, you will have association fees to pay each year. Think of all the extra expenses that will affect your budget.

Get help planning your home purchase. Whether you research the process over the internet or simply ask family and friends for advice, you will find that knowledge is one of your most important tools when buying.

Owning a home forces you to undertake a great deal of responsibility. If you are prepared, plan ahead and assess all possible factors that will affect the amount of money you spend both immediately and in the long run. The more detailed and accurate the planning, the better off you will be.