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How to Buy Your Very First Home Buying a home could be the biggest single purchase you can ever make, so it’s important to be familiar with the numbers before signing any contract.If you’re prepared to take the leap and get your first home, below are seven tips you should consider: Your Budget This could sound elementary, but underestimating the actual costs of ownership is a typical mistake.Not only will you have to pay a mortgage, but you’ll need to settle taxes, insurance premiums, and other expenses associated with with owning a home.These days, a down payment is about 20% of the purchase price.
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Your credit score plays a crucial part in getting low-interest financing.Go over your credit report and eliminate discrepancies before you face your lender. Keeping It Small Building up new debt prior to home financing can influence your debt-to-income ratio and the amount you can borrow from a lender.Therefore, postpone buying a car or any other big-ticket item on credit if you have plans of buying a home very soon. Doing Your Homework Save time and cash by shopping around–there are tons of websites that can help you with this– to know which lenders have the best interest rates in your area.Comparison-shopping will help you save cash over the long term, and when you’re dealing with a 30-year mortgage, that long term can pretty long. Emergency Funds Many a dream house is now a money pit, costing the homeowner way beyond what’s budgeted.What happens when your street floods or your plumbing needs a major fix?Prior to the purchase, hire a well-reputed home inspector, and prepare for the unforeseen with money allocated for the unknown. Energy Tax Credits Qualifying energy-efficient equipment in your home can get you some useful energy tax credits.Thirty-percent of solar and geothermal installation costs can be claimed on your taxes, and that can give you very nice savings. Renovations Although you normally can’t subtract home improvements on your annual tax return, the good news is that these costs can come in handy if you ever decide to sell your home.Just include them in your adjusted cost basis: the bigger the basis, the lower your capital gain.In order to qualify as a deduction, the renovation must increase your home’s material value, stretch your home’s useful life significantly, or add new uses to your home.When calculating capital gains, you may as well exclude a maximum of $250,000 of the gain from the sale or, if you’re filing jointly, up to $500,000. A home can help you build a future worth looking forward to, or break your the numbers first before buying into the dream, First know your numbers, then you can buy into the dream.