Buying your first home is one of the most exciting events that you'll experience as an adult. However, it is important that you are mentally, emotionally, and financially prepared to become a homeowner. Let's take a closer look at the challenges that you'll likely encounter on the road to closing on a real estate purchase.

Is the Home Located in a Good Neighborhood?

A nice home in a poor neighborhood can be harder to sell than a damaged home in a nicer neighborhood. This is because it's much easier to upgrade a home than it is to upgrade your neighbors. Ideally, you will shy away from homes in areas that have high rates of crime, poor schools, or that are located close to noisy highways or airports.

You Don't Want To Be House Poor

It's important that you take all the costs of owning a home into account when determining how much house you can afford. For instance, your mortgage consists of both a principal and interest payment. You'll also need additional capital to pay property taxes, homeowners insurance premiums, and property maintenance costs. Finally, be sure to account for the cost of furnishing your new house

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Be Sure to Review Your Credit Report

Lenders will base their decision to approve or deny your mortgage application on several factors including your credit score, income, and employment history. Your credit score itself is based on numerous factors such as your previous payment history and credit utilization ratio. If there are errors on your credit report, it could reduce your score by up to 100 points or more. Therefore, it's important to review it to ensure that loan decisions are made using accurate information.

Don't Skip the Inspection

The home inspection is perhaps the most important part of the home buying process. It allows you to gain critical information about the home such as the presence of a leaky roof, water damage in the living room, or a crack in the foundation. If you notice any significant problems during the inspection, you can ask the seller to fix them prior to taking ownership of the property. At a minimum, the seller might agree to share a portion of the cost of repairing the roof, a floor damaged by water, or a cracked foundation. Alternatively, it is generally within your rights to walk away from the deal without losing your initial deposit.

Be Prepared to Spend Thousands of Dollars on Closing Day

You can expect to spend up to 3% of the home's purchase price in closing costs such as a down payment, property taxes, and document fees. These costs are traditionally paid for on the day that the transaction closes. If you have an FHA, USDA, or VA loan, friends or family members may be able to help pay some of these expenses.

While buying a home can be a fun experience, it can also be a challenging one. Fortunately, your real estate agent will be able to answer any questions that you have about finding a home or obtaining a loan.