10 Tips for 1st Time Home Buyers
If you are a first-time home-buyer, then it’s smart to look up tips that tackle the home-buying process.
Without a doubt, this is an exciting time for you. From looking up properties to settling on the one and planning your new life, times are exciting. But you shouldn’t go into it without any backup. Don’t make the impulsive mistake and rush into things.
Before you put a down payment on your 1st home, take the time and read about our 10 tips for 1st time home buyers. With all that said, let’s begin the list.
Pay Off Your Debt
Let’s be real about it. Purchasing a new home is a rather expensive acquisition. It will no doubt take many years for you to pay off the loan for it. But a rather obvious mistake that 1st time home buyers make is going into it with a lot of debt.
Debt is money that you own to the bank or any other entity. Thus, it will be smart to pay it off before you make this costly acquisition. But not only that, you should have enough funds to take care of any emergencies that arise in the first six months.
You should have at least enough money to pay for the rate for the first few months.
Determine the Best Option
Everyone wants to live in a nice house with a pool and dozens of rooms. But sadly, not everyone can afford such a luxurious life. What is the reality for some people remains a dream for others.
Thus, although it might be tempting to settle in a dream home, you should determine what the best option for your money is. You shouldn’t make the mistake of getting too attached to a home you like.
Instead, check what your budget tells you and settle for the one that is financially the most reasonable. Take into account yours and your partner’s monthly salary, and determine how much you can pay on a monthly basis.
Save For a Down Payment
A down payment is the least you can do if you lack the finances to purchase the house with your own money. Although a down payment makes up around 20% of the total cost, not many Americans can afford it.
If you haven’t got the money to put up a down payment, then you will have to pay for private mortgage insurance. This insurance costs 1% of the total loan amount, and that 1% is paid off each year until you pay off the loan. That means that a PMI will cost quite a bit.
Professionals will always recommend you save up for a down payment as you’ll pay off the loan faster. Not only that, but the interest rate will not fluctuate and will instead be the same for the duration of the loan.
Have Enough Money to Close the Deal
Not many Americans know this but you’ll also need money to close the deal. If you’re wondering how much this costs, the closing costs usually vary between 3 to 4% of the total cost of the home.
This is yet another hidden cost that can quickly ruin the dream if not taken into account.
Get Preapproved for a Loan
This is highly important as it highlights your desire to buy a home. Getting preapproved for a loan tells sellers that you mean business. This means that you will get the nod much quicker than a person that hasn’t gotten preapproved in the eyes of the seller.
The way to get preapproved is very simple. You will need to talk to a mortgage lender and get a letter that states exactly that. There are also lenders that preapprove loans to buyers that live debt-free. If you happened to live debt-free, then always go with lenders that believe in debt-free homeownership.
Always Go for Your Price Range
Every 1st time home buyer looks for properties within their price range. Settling off from this rule can cause serious financial harm. It is estimated that nearly 50% of all homeowners have found their dream home online.
And the great thing about the online world is that you can look up homes within your price range. This is thanks to the technology that allows buyers to specifically look up homes based on search criteria.
If you’re looking for homes within a specific area that doesn’t cost north of $150,000, then you absolutely can do that.
But the important thing is to never divert from your price range.
Always Research the Neighborhood First
If you’re a 1st-time homeowner that wants to start a family, the first thing you should do is research the neighborhood. By this, you need to take into account the crime rates and statistics, preschool and school distances, and other amenities.
Official accounts estimated that people are more willing to sacrifice the quality of the home than to sacrifice the quality of the neighborhood. This means that people are more willing to sacrifice their dream home than the surroundings in which they live.
Always Attend Open Houses
Don’t just settle for the first home you find, even if the home is within your price range. Open houses are sort of events where people can come in and check a property that’s been put on sale.
And these are great as the seller invites you over to have a look at the home. Instead of calling agencies, simply attend one of these and see what the properties offer. If you like what you see, then you can always schedule another appointment.
Give a Competitive Offer
It’s not always about paying the price of the property. You can hassle and send a competitive offer that the seller can still consider. One thing to note is that you should always go within your budget.
Making compulsive offers than don’t fall within your finances is a mistake you would want to avoid at all costs. Even if the house is well worth it and the neighborhood is great, offering more than what you can pay isn’t clever.
Be Ready to Close
The hardest thing to do when selling a home is to close the deal. And this is also extremely difficult if you’re a buyer; a buyer among other buyers.
It is estimated that it takes around 45 days on average for a deal to close. This might give you enough time to think things through, but you should always look at the fine print before putting your signature.
We hope that these 10 tips are more than capable of guiding you through the home-buying process. Following these tips will protect you from making a costly acquisition, as well as protect you from any hidden costs that might present themselves.