If you are buying your first home, you probably have more questions than you do answers about the process. With all of the excitement, anticipation, and nerves associated with purchasing your first home, the best way to make it easier on yourself is to prepare.
These five valuable tips will help make your first steps toward home ownership easier.
Owning your first home is exciting – but don’t jump in unprepared.
1. Research Is Key
There are plenty of factors that you’ll have to keep in mind when looking for your first home, not the least of which is the location. Seek out market reports in some of the areas you are looking, to better understand both the purchase prices in relation to comparable home sales, as well as the chances of holding that value over the long term. Particularly with your first home purchase, you are better off taking it slow and finding the right place, than simply settling on the first thing you find.
2. Plan For The Down Payment From Day One (Or Before)
If you have just made the decision that you’re ready to become a homeowner — congratulations! But are you sure you have the financial wherewithal to make it through the purchase process? The down payment is unavoidable, and will require you to put a nice chunk of your money upfront — most often between 10 to 20% of the total purchase price. The higher the down payment, the better the loan terms. If you can put down 20% or more, not only will you have access to the best mortgage rates, you also won’t be responsible for additional costs like private mortgage insurance (PMI).
3. Know Your Loan Options
There are a number of loan programs available for first-time buyers that can help you access funds with more favorable terms. However, each of these will have different application requirements and terms, so it is in your best interest to shop around before selecting a lender and loan type. In order to get the best mortgage rates you’ll need to have stellar credit and strong finances, so check your credit score and report and make sure you look attractive to your lenders as a stable borrower.
4. Understand What You’re Getting
A trap that many first-time buyers fall into is settling on a “fixer-upper” or a house in less-than-stellar condition that allows them to access a bigger property or better location. The problem? After the down payment, it is rare to have the funds available to address all of the property’s problems — which can be a factor in any home purchase. You’ll want to have enough funds built up to handle any size repairs or maintenance costs when you take possession of the home, but it’s also crucial to be involved with the inspection process. Inspect every system for needed updates or repairs, as these can typically be negotiable terms with the seller.
5. Don’t Fall In Love
The worst thing you can do as a new homebuyer is to fall in love with a property. You want to have several options of potential homes, in the case that issues arise with the property title or multiple bidders. You will love your first home, even if it was your third choice, so take your time to make sure you are entering into the right deal for your situation.
If you’re ready to start the search for your first home, contact us today to get pre-qualified for a loan so you are prepared for what you will be able to spend.