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Buying a Home for the First Time

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 may sound basic, but underestimating the real costs of ownership is a usual mistake.Not only do you have a mortgage to pay off, but you’ll have to pay insurance, property taxes and other expenses that are related to owning a home.Currently, a down payment will be around 20% of the purchase price.
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Your Credit Score
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Your credit score plays a crucial part in getting low-interest financing.Look at your credit report and work out discrepancies before you meet with a 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.In short, avoid shopping for any big-ticket item on credit, such as a car, if you intend to buy a home in the near future.

Doing Your Homework

Save cash and time by shopping around–there are loads of websites that offer help with this– to find out which lenders are offering the lowest 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 home has become into a money pit, costing the owner more than intended.What happens when your street floods or your plumbing needs a major fix?Before the purchase, hire a trustworthy home inspector, and get ready for the unexpected with cash allotted for the unforeseen.

Energy Tax Credits

To enjoy energy tax credits, qualify energy-efficient equipment in your home.Thirty-percent of solar and geothermal installation costs can be claimed on your taxes, and that can give you very nice savings.


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.Simply include them in your home’s adjusted cost basis; bigger basis means smaller capital gain.To qualify as a deduction, the renovation should add materially to your home’s value, extend your home’s useful life considerably, or give your home new uses.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 prepare for a brighter future, or it can break your proverbial bank.Don’t buy into the dream without running the numbers.