9 Best Tips for a First-Time Homebuyer
As a first-time homebuyer, you are about to enter a new, exciting chapter in your life. Going through the process of purchasing your first home can seem like an impossible challenge, but it doesn’t have to be. Here is a list of the 9 best tips for a first-time homebuyer.
- Check your credit. When is the last time you checked your credit? Many people forget that credit plays a major role in your interest rates and ultimately your monthly mortgage payment. Take the necessary steps such as paying down your credit card debt to make a positive change in your credit. Regardless of your credit situation, there is likely a mortgage program for a first-time homebuyer like you.
- Get pre-approved. Before you begin your home search, going through the pre-approval process can be educational for a first-time homebuyer because it gives you an idea of what price range you can potentially afford. Keep in mind that what your bank qualifies you for may not be what you feel comfortable spending.
- Organize. The minute you decide you want to become a first-time homebuyer is the time to get organized. Start looking at everything from your income to bills. Analyze everything including how much you are spending on those daily lattes. How much money are you making? Where is your money going? Create a spreadsheet to track of your expenses. Next, make a list of all everything you need in a house. Keep in mind that needs and wants aren’t always going to coincide. Take the list with you to every showing and check off items to see which houses actually fit your needs.
- Figure out your down payment. Most traditional loans require a 20 percent deposit, which may be pretty steep for the typical first-time homebuyer. This means a $40,000 deposit is needed for a $200,000 home. If 20 percent is not possible for you, there may be other options, such as a FHA loan with as little as 3.5 percent down. Discuss your options and concerns with your Realtor or lender!
- Learn about the neighborhood. During your home search, do your research on the neighborhood. Look into the local school districts, even if you don’t have kids. Also check out the local crime rate and the area’s accessibility to highways.
- Think about the future. When buying your first home, it’s so easy to get wrapped up in the “here and now” mentality. However, we encourage you to think about your 5-year and 10-year plan. While it’s difficult to have everything planned out, having an idea of what you want for the future can help you keep things in perspective.
- Create a budget in advance. Calculate your monthly expenses ahead of time to help budget for how much house you can reasonably afford. Keep all of those additional household expenses in mind things such as garbage service, utilities, phone, groceries, and homeowners association fees.
- Research current grants. Ask your Realtor or search the internet for grants that are available for first-time home buyers. There might be some worthwhile grant options available to you based on your location or profession. A little research could save you thousands.
- Understand the contract. Your mortgage contract is one of the most important contracts you will ever sign. As a first-time homebuyer, there may be terms and phrases that you don’t understand. Never sign something if you’re uncomfortable. Ask a parent or friend who has gone through the process to tag along and answer questions. Or, if needed, hire a real estate lawyer to help you understand the terms to which you are agreeing.
Before you dive into your search, some simple organization and prep work can make the first-time homebuyer process much more manageable and enjoyable. It’s also important that you make your purchase agreement contingent upon a home inspection. A qualified home inspector can answer any questions or concerns about your property so that you understand everything you need to know about the home. Get in touch with Inspect-It 1st® today for an honest property assessment.