Alright so the number one thing I think you need to do as a first-time home buyer is- Determine how much home you can afford. When I say “can afford” I mean how much can you realistically and comfortably afford. I see a lot of first time homebuyers speak to a lender and they’ll say “Oh I’m qualified for.. you know X amount!” And then once they get under contract, and they look at taxes, and all the things that go into that whole monthly payment, they start to freak out because they didn’t realize how much the payment really was.
So, I would say reverse engineer that. Determine a monthly payment that you’re comfortable with. So, let’s use easy numbers, let’s say your rent is $1,500 a month and you’re thinking that you can make a $2,500 a month payment. So, make your $1,500 a month payment, and make a $1,000 a month payment to yourself.
Now, this is going to do a few things..
1) Make you pay yourself some money so you can increase your savings.
2) You’re going to start making that $2,500 a month house payment. You’ll find out quickly if that amount is to hard to make each month or maybe that amount is just fine, and you may be comfortable with a higher future mortgage payment.
So, figure out the monthly payment that you’re comfortable with and determine how much money you want to put down or how much money you can put down. Then figure out the loan product you’d like to go with. AFTER THAT you’ll find the home price that you’re comfortable with.
Determine what you’re willing to spend each month for your mortgage. Determine how much money you want to put down. THEN you will know what price of a home you are comfortable with purchasing!
Hope this video was helpful, if you know of anyone that is thinking about being a first-time home buyer go ahead and share this with them.
This is probably one of the biggest questions I get from first-time home buyers!