Buying a Home First Time? Read This
Buying a home first time? The process can be intimidating, especially if you’re not ready for everything involved. From the paperwork to the credit checks, sign-offs, evaluations and actually paying off this massive investment, there are a lot of struts to this house, and you need to know where they all are.
Join us, today, as we break down five choice tips for first-time homebuyers, so you can come into this purchase ready to do business.
Start Saving For Your Downpayment
It’s a mortgage lender’s job to get you, the potential homeowner, to buy the house, and they aren’t going to let a downpayment get in the way of that. It’s become popular for many lenders to allow new buyers to put down less than 5% on a new home. This might seem like a great gift, but, really, putting down anything less than 20% often equates to higher costs and costly private mortgage insurance, making the overall purchase more expensive.
When trying to save for a downpayment, set aside your tax refunds and work bonuses for this payment alone. You can also set up an automatic savings plan to help matters along.
Follow Up On Your Credit
Not to shame you, but if you don’t know that your credit score has a direct impact on your ability when it comes to buying a home first time, you’ve missed a few important steps before deciding to buy a home. Your credit score is the most important factor in qualifying for a loan and will determine how much you can apply for.
Go to a credit agency or your bank and request a copy of your credit score. Examine it closely for any potential mistakes or things you’ll want to dispute. Do this well in advance of your first meeting with your home seller or financier.
Explore Your Options
In a modern consumer culture, there are more options now than ever before. Mortgage plans might seem limited when the people selling them claim to be the best in town, and down payments could seem set in stone as well.
The happy little truth is, however, that there are many options out there for you to explore. How much you put down has an impact on your monthly mortgage payment and interest rate. For smaller mortgage payment rates, opt for a 30 year fixed mortgage. If you can afford larger monthly payments, a lower interest rate will come with a 20 year or 15 years fixed loan.
As a home buyer, you can also pre-qualify for a mortgage, providing you with an estimate of you’ll be able to borrow. This is a number based on your monthly income and debts.
Keep in mind that, as you get closer to buying a home, it’s smarter to get preapproval, where the lender will comb through your finances and confirm how much they’re willing to loan you.
A preapproval letter makes you look more serious to a seller, setting the tone for your transaction and giving you a potential upper hand.
Stick To Your Budget
In-home purchases as in buying a car, the best piece of advice is something you’re likely to have already heard from your mom and dad. Stick to your budget.
Before buying a home first time a good starting point to this tip is to look for properties that cost less however much you were approved for. If someone said the roof of your living room was a certain measurement high, you wouldn’t buy a Christmas tree that’s exactly that tall. It would touch the ceiling, and then you wouldn’t have room for the star on top.
Similarly, buying a home for exactly your approval amount doesn’t account for the standard monthly expenses that might come up during your time there.
Make sure you’re ready to buy, both emotionally and financially
If you expect to relocate in a few years, this may not be the right time for you to buy. If you don’t have the cash for a down payment, closing costs and other expenses, you may be better off waiting before buying a home first time.
Look at your life, your career, your finances and your future expectations, and determine whether buying a house is the right move at this time.
Know what’s important to you
Weather Buying a Home First Time or in general. No house will be perfect, so where are you willing to compromise? If you want a specific school district, are you willing to accept a smaller house? If you want to be near the water, could you be happy with a condo? Are you willing to accept a longer commute to get a larger house?