Buying your first home is a milestone and in some cases, such a daunting one that you don’t know where to begin in the process. While buying a home can be about taking the plunge and acting quickly when the house of your dreams comes on the market, it also requires careful financial planning and consideration. Following your gut when you fall in love with a property isn’t always the best option. In buying a house, you’ll also need to be practical – a bad decision can haunt you for years to come.

Is Home Ownership Right for You?

The first question to ask yourself is whether or not it’s the right time for you to own a home. If rent is cheap where you live, why do you feel the need to buy? While you can’t know your future for certain, what do you see happening in the next two to five years? Are you considering a move? Is your job stable? Real estate can be a difficult investment to get out of, especially in a buyer’s market. You might lose money if you sell after one or two years. If you see uncertainty in your future, you should stick to renting.

Get Prepared

If you want to get a good deal on your home, you will need to have a good credit rating before you go looking. You will also need enough money in your savings account to pay for the initial down payment, somewhere between 5% and 20% of the home’s price, or more if you can afford it – if you already have this money saved, it’s a good sign that you’re ready to buy. Moreover, the higher your down payment, the less you will have to pay through a mortgage. It’s also a good idea to get pre-approval on a mortgage from a lender before you go out to see homes. Don’t forget to factor the interest payments on your mortgage into an assessment of your finances. You’ll want to be sure that you can afford everything.

Expect Additional Costs

Don’t put yourself in a situation where you’re stretching your budget too far. Keep in mind that there will be additional, often unexpected costs associated with buying a home.

In addition to mortgage payments, you’re also going to need to take care of taxes, maintenance costs, and homeowner’s insurance. If you go with a condo, you’ll also need to pay condo fees. If you go over your budget on the cost of the home, you may not have much money leftover for these additional costs.

Get an Inspection

Although it may cost additional money, it’s worth your while to get a home inspection – especially if the property you’re interested in happens to be a foreclosure. Unless you happen to have experience or knowledge pertaining to building issues, a home inspection can help you to understand exactly what condition the home is in. If you buy the home without an inspection, you could easily find yourself in hot water financially when faced with repairs or maintenance costs that you didn’t anticipate.