With a flaming hot housing market, many first-time home buyers are entering what’s become an intimidating time to purchase a beginner home.
Because of this, we’ve decided to put together a helpful list of tips to guide you through the homebuying process.
DETERMINE YOUR GOALS FOR THE HOME
Most first-time home buyers stay in their starter home for three to five years. How long do you plan to stay in your new house? Are you in the market for a fixer-upper? How about a foreclosure? These are important questions to raise before you begin your search.
START SAVING MONEY NOW
There are a lot of costs associated with purchasing a home. Be sure to put back a sizeable amount for your down payment. Your down payment is determined by your credit score, which will be charged as a percentage of the overall asking price. Down payments typically range from 3% to 10%. Click here for a Down Payment Cost Calculator.
You will also need to set funds aside for closing costs. These charges are generally anywhere from 2% to 5% of the total loan amount. Click here for a Closing Cost Calculator.
And finally, you may need help with moving costs. Moving companies determine the cost of a move by the volume of the items moved. So, be sure to have a clear inventory of your belongings. Click here to learn more about getting a moving quote.
CHECK YOUR CREDIT
As we’ve mentioned, your credit score will ultimately determine the overall price of your prospective home. Before beginning your search, you’ll want to make sure your credit score is favorable. Click here for a Free Credit Score Report.
DETERMINE HOW MUCH YOU CAN AFFORD
You don’t want to outlive your means when it comes to buying a home. Determine a price that will work for you long term in order to avoid bankruptcy or foreclosure. Most experts suggest limiting your monthly mortgage payments to 30% or less of monthly household income. Click here for a Home Cost Affordability Calculator.
FIND THE RIGHT MORTGAGE
Not all mortgages are equal. There are many options for first-time home buyers:
- FHA Loan – the top program for those with weaker credit
- VA Loan – designated for U.S. Military Service Members
- USDA Loan – generally used for rural properties
- Fannie and Freddie – conventional loans with a 3% down payment
- State First-Time Home Buyer Program – available for first-time home buyers in many states
Home loans are one the biggest financial commitments of a person’s life. The term of loan can range from 10 to 30 years. Research your options thoroughly before making a decision.
Click here to learn more about each type of mortgage.
GET PRE-APPROVED FOR A MORTGAGE
If you seek out mortgage pre-approval with your financial institution, you will have more leverage when putting in an offer. Mortgage pre-approval letters ensure the financial institution will loan you a certain amount under specific conditions. Be sure to read over the pre-approval terms carefully.
CHOOSE A REAL ESTATE AGENT CAREFULLY
A real estate agent can make or break your home buying experience. A top notch realtor will spend a considerable amount of time finding homes that fit your unique wants and needs. A poor realtor will only attempt to make the most from a sale, regardless of a client’s needs. With that in mind, it’s always a good idea to interview several real estate agents before making a final decision.
RESEARCH THE NEIGHBORHOOD
Sure, the house may be everything you’ve ever dreamed of owning, but the neighborhood surrounding it is important. Crime rates, school zones, and other factors play a role in the overall appeal of a house or apartment. Click here to check crime rates by neighborhood.
NEGOTIATE, BUT STICK TO YOUR BUDGET
It’s easy for costs to add up during the homebuying process. However, you will need to stick to your guns in order to maximize your dollars. If you see costs beginning to rise, nip it in the bud or you could wind up with a poor investment. The seller may have some wiggle room when it comes to the price, so it doesn’t hurt to make a lower offer in an attempt to secure a better value.
PAY FOR AN INSPECTION
The last thing you want is any unforeseen issues with the home. Foot the bill for a private inspection to ensure the home is everything you want and more!
PURCHASE HOME INSURANCE
When you get down to brass tax, home insurance is vital to securing the value of your belongings. Be sure to purchase a comprehensive coverage plan to protect the items you hold dear.