Owning your own home is considered an American dream. However, buying a home for the first time can be challenging. This is because there are lots of decisions, steps, tasks and requirements. With all of the excitement and little details that come with home buying, it can be easy to make mistakes along the process.
To ease your anxiety of being a first-time home buyer, we have put together a list of your top ten first-time home buying tips.
Start Saving for a down payment early
Its important to start saving for a down payment early. You can do this by saving a portion of your paycheck every month or saving your tax refunds for your down payment. Lenders usually require 20% of the cost of the home as down payment. Recently, lenders have been allowing to put down less than 20%.
Stick To Your Budget
You may want to look at all the available homes on the market, but remember you have to be able to afford the home you pick. Make sure to only consider properties that you can afford. It is important to understand all the expenses you will have as a home owner (i.e. water bill, gas bill, home owners insurance, energy bill). It is a good idea to stick to homes that you are pre-qualified for.
Think In Advance
Don’t just think about what type of home you want to live in right now, think about the future. If you don’t have kids yet or if your family is still growing, think about those variables. Make sure you plan so that you have enough space or that you live in an area with good schools. The last thing you want is to purchase a home and have to move in a year because you didn’t think in advance.
Geography is everything. If you want to live in a certain neighborhood make sure to only look in that area. LookinG elsewhere might divert your attention and you may end up putting in an offer for a house you love but a neighborhood you don’t love.
Pre-Qualified Mortgage/ Pre-Approval
If you can get a pre-qualified mortgage, you can provide an estimate of how much a creditor is willing to lend you. This is great to show that you have the finances to purchase a home. However, it is better to get pre-approval from the bank. Receiving pre-approval means that your fiances are fully examined by a creditor. A creditor will write out what conditions and the amount you are approved for. Having a pre-qualified mortgage or even better pre-approval helps a seller take your offer more seriously.
Do A Credit Check
Everything these days is based on credit. Even buying a house. This is why before you begin your home search, you should check your credit. You can request a free credit report from the three major bureaus: Equifax, Experian, and TransUnion. If you find a discrepancy on any of the reports then you can file a claim to have it fixed. You will need the best credit possible when you apply for a home loan.
The home buying process is all about negotiating. You can negotiate the asking price. You can negotiate closing costs. If you find any issues during your inspection, you can also negotiate then.
Remember this is your first time buying a house and it maybe overwhelming. There are many real estate professionals who would love to help you find the perfect home and also help you through all of the paperwork. By hiring a professional, you can make sure that everything is done right and legally.
FHA And USDA Loans
If you do not have enough saved up for your down payment, then you should look into a FHA loan or USDA LOAN. If you qualify, it will help you purchase your home without any delay.
Your first instinct might be to purchase a home that is model home ready. To purchase a home like this, you will have to pay an arm and a leg. It is a good idea to look into homes that need some work. You can offer a price lower than your budget and then use the money saved to renovate. This is a great way to save money and to also make your new home more to your taste.
As a firs time home buyer, you are probably very excited. Make sure in this excitement you think logically about what goes into home buying. The tips above will help you with your home buying process.