“If we put all of our savings together we might be able to scrape together a mortgage down payment.”
I couldn’t believe what my friend was telling me. She was ready to buy a place with her boyfriend already. They were a fairly new couple and they both had barely any money saved. This situation really bothered me, but I didn’t want to be a jerk by giving unsolicited advice.
Then a few days later a buddy at the gym proudly told me that he bought a condo. He then pulled me aside and asked for tips since he knew that I was a personal finance blogger.
“I used a line of credit to make the down payment. Do you think it's a bad idea?”
I wanted to yell at both of these friends. I couldn’t believe what I was hearing.
Buying your first home is no joke. You should take this purchase seriously. I’ve seen friends go poor from buying a place too soon. I’ve seen friends get stuck eating cans of beans because they bought a place before they were ready. Buying a home before you’re ready will destroy your finances and hold you back in life.
This is why I had to write this article.
Let’s look at the checklist for the first time home buyer:
1. The correct amount of savings.
Do you have enough money saved up? You need more than just the money for the down payment. What about moving costs? Lawyer fees? Taxes? Maintenance fees? Moving costs? Upgraded cost of living? Are you aware of all of the expenses that you're going to be hit with?
2. A solid credit score.
How’s your credit score? With a poor or even average score, you’re going to struggle with finding a mortgage. If you do find a mortgage, you’ll lose your pants on the interest rate.
3. A steady job.
Is your job stable? Will you be able to make your mortgage payments for the next 25 years? Will your income increase? Is there any chance of you losing your job?
4. Know the area.
Do you know the community? What’s the area like? Do you plan on having kids? Kids need schools. How far is your work? Do your friends live close by?
5. Ensure you’re ready for this commitment.
Can you handle home maintenance? Are you ready to live in this place for the next ten years? I get bored easily, so I need to move around often. You don’t want to move in and realize that you can’t tolerate your new community.
6. Money for furniture and all of the extras.
When you get a new place, you’re going to want to furnish every single room. You’re also going to want to throw more parties. Everyone wants to come over to see the new place. You want to throw lots of parties now that you own a place.
7. Friends to help you move and set the place up.
Do you have friends that you can rely on? I almost freaked out one night when my electrical work wasn’t going my way. Luckily, my buddy Robert drove down with his tools and fixed everything. All that Robert asked for was a bottle of vodka and good company in exchange for his services.
Are you ready to buy a home? You tell me. I hope that you take the time to go through this checklist.
Image Courtesy of ©iStock.com