Real estate can be an excellent investment whether you plan to own several properties or you are simply looking for a home of your own. However, if you have always been a renter, you might feel like the hurdles to buying your own home or starting to invest in real estate are overwhelming. You might not know how to find the right property, how you will afford it or what kind of steps you need to take to put the whole process in motion.
Where to Look
Depending on your reasons for buying property, your financial situation and the flexibility of your job, figuring out where to look might simply be a matter of deciding between neighborhoods or city versus suburbs, or it could mean you can choose between various cities or states. The number of variables is almost infinite based on your personal situation and preferences, but the process of figuring out your priorities does not vary much.
Thinking about your must-haves, the things you would like to have but that are not necessary, and the things that you find unacceptable can help you begin to narrow things down. One important consideration is whether you want to purchase property during a time when prices are skyrocketing. This often represents a real estate bubble, and if you are not careful, you can find yourself owning a home that is worth less than you paid for it.
The next challenge is getting your credit in order and saving up for a down payment. It’s worth trying to make a larger down payment since this can result in more favorable lending terms. You may be surprised at where you can find ways to save. For example, if you are paying off student loans, could you get a lower interest rate? Many people do not realize they can refinance their student loans from Earnest.com and pay less.
You may also be able to cut back on your discretionary spending. Many people simply spend what they make without paying much attention to how much is going toward entertainment, food, clothing and other items that they do not necessarily even enjoy very much. Making and sticking to a budget can be satisfying when you are working toward a goal you are excited about.
What to Do
Once you’ve identified what you want and saved money, the next steps may still be a mystery. Should you talk to a real estate agent? Do you need an attorney? What other professionals might be able to help you? Do some research, and talk to friends and family to see what they advise and if they can recommend any professionals.
Getting a mortgage preapproval before you start looking in earnest can be a good idea. This makes you more attractive to sellers, tells you your financial limits from the start and can make the whole process go quickly and more smoothly. You’ll need to be very organized at this stage since your application will require the submission of a number of documents, including bank statements, tax returns and information on income.