20 Helpful Tips for First-Time Home Buyers

Looking to buy a home for the first time? You are probably very excited as well as anxious about this big leap! Buying a home for the first time often seems like a daunting and time-consuming experience. A home is probably the biggest investment you’ll make. Hence you might feel the pressure to get it right. Buying a home for the first time requires patience, flexibility, and thorough research. And with all the different factors and details to consider, you can quickly feel overwhelmed. A bit of preparation can make the buying process seem much less scary. It’s time to figure out where to start the search and what to expect from the buying process itself. Here’s a handy list of tips to help you get through the buying process smoothly so that you get the home of your dreams.

Know What You Can Afford

When buying a new home it is most important to know your limits. Find out what amount you can afford to pay for your home. Calculate the overall monthly payments including taxes, interests, insurance, association dues, etc. Look at the monthly payment as well as other expenses like repair, maintenance, etc. and then make an informed decision on “how much house can I afford with my income“.

 Save Before You Buy

The standard industry norm is to have at least 20% of your target purchase price available for down payment. However, there are other options available in many loan programs that offer less down payment and additional premiums in monthly payment. It is still advisable to have some amount saved for the down payment to ease the process and reduce your future expenses.

Consider All Factors While Setting a Budget

It does you no good to fall in love with a home that’s out of your price range. Before you start hunting homes, you need to set a budget and discuss it with your lender. Remember to factor in principal, interest, property taxes, and home owners insurance while calculating the budget. Be sure to budget for moving expenses, utility bills, miscellaneous expenses, and additional maintenance costs.

Make a Wish List

A great way of organizing your search is to make a list of what you like and don’t like. Your list should include all your must-have features and deal-breakers. It should also have things that you want to have but are not a deal-breaker. It is a starting point which narrows your search. However, it is not definitive and can change during your search.

 Keep an Open Mind

Despite the wish list, you should keep an open mind while looking at homes. Even if you like a home, consider all the factors before deciding on it. The First thing you must have in mind is how to choose the right neighborhood. Also be open to repairs and maintenance costs, etc. Bounce ideas off your realtor or agent. Keeping an open mind about the possibilities in a home will help you see it in a different light.

Improve Your Credit Score

A good credit score improves your chances of approval on a mortgage. It can also help you secure a lower interest rate. Keep your credit utilization below 30 percent and don’t open any new credit accounts when planning to apply for a mortgage. Be sure to check your credit score before you start speaking with lenders. Remember, when it comes to your credit score, higher is always better!

Hire an Experienced Realtor

When you’re meeting with realtors and agents, it’s important to find someone with the expertise and experience to guide you through the buying process. Meet with at least three realtors before signing one on. Choose a realtor you trust and get along with. Your real estate agent should truly care about you and your needs and help you every step of the way.

Get Pre-approval Letter

Before you start any serious house hunting, you need to get a pre-approval letter from a lender. This letter confirms the amount you can borrow from them. It proves to the seller that you have the necessary liquidity for the payment of the closing cost. It also determines the maximum price you can afford which helps in focusing your search accordingly.

Find a Lender You Can Trust

Find a trustworthy and responsive lender. Consult with a variety of lenders like mortgage brokers, credit unions, and banks before committing with one. Make sure you’re comparing all aspects of the offer, including interest rates and any extra fees involved.  Lower fees and lower rates should not be the only factor when considering a lender.

Do Your Research

Although your realtor guides you through the buying process, it never hurts to do a little research on your own. Learn the differences between various types of mortgages; research your preferred neighborhoods, home inspectors, etc. Don’t be shy to ask any questions about the property. Be proactive and solve all your queries before signing on the dotted line.

Evaluate Your Neighbourhood

When you have a potential home in mind, do your research on the neighborhood. Talk to the neighbors and visit the community during the day as well as night. Check the cost of living, safety and security, and car and home insurance rates in the area. Understanding these costs ahead of time, helps you stick to your budget when you’re making an offer.

Get a Second Opinion

If you find a suitable home that you like, don’t rush into buying it. Check the place thoroughly yourself and consider all factors before finalizing on a property. Better yet, get someone else’s opinion. Bring along a friend or family member you trust for a second inspection of the home. They may notice something that you previously missed.

Find Out Seller’s Price Flexibility

Checking the flexibility of the seller before you make an offer often helps a lot. Ask the seller how flexible they are regarding the price and what they expect in an offer. This way you will know when there is room to negotiate. It also helps you avoid offending the seller with a low-ball offer which is well under the asking price.

Home Inspection and Repair Credits Negotiation

Don’t ever forego an independent home inspection. An inspection clues you into potential problems with the home before you move in. Inspections can uncover any serious or significant problems. This way you can ask the seller to help with some of the repairs and you can prepare for others.

 Negotiate the Offer

Once you finalize a home, work with your realtor to come up with the right offer. Make sure you consider everything and your offer is not too low. Prepare to negotiate and discuss the credits to repair or replace any items found in the inspection. You can also negotiate with the seller on having them pay for the closing costs associated with the sale.

 Get a Home Owner Insurance

Your bank or lender will need a homeowner’s insurance to process your loan. Call several agents to get quotes and compare all the options to get your best deal. If it’s your first time, sit down with your agent and discuss the policy thoroughly. Most lenders create an escrow account for you, which will automatically pay your insurance and property taxes each year. 

Get All the Paperwork from Seller

It is a good idea to get all the related paperwork from the seller for any mechanical or other significant updates made to the house. This way you will know what all is covered under warranty and what’s not. It also helps to know who to call when something breaks or you need some repairs done.

Ask Realtor About Expected Closing Costs

Closing costs typically include the realtor’s fees, the cost of appraisal and title search, and obtaining private mortgage insurance or loan if your down payment is less than 20%. Ask your realtor what closing cost they expect and prepare accordingly. Also, read the documents before you sign, so you understand what you’re agreeing to.

 Have a Cash Reserve Ready

It’s also important to save as much money as possible and have cash in reserves that extend well past the closing costs. This way, your wallet isn’t stretched too thin and you can feel financially comfortable even after the purchase. You never know when you need to fund some repairs or other miscellaneous expenses.

 Get Moving Insurance

Once you’re ready to move, talk with several movers, and get quotes from at least three. For an accurate quote, have the moving company visit your current space to look at the number of items they’re moving. However, damage happens during moves, so you need to prepare for it. Consider getting moving insurance; it’s not that expensive and it’s definitely worth the trouble.

Home ownership is also considered a form of forced savings as it allows you to build equity and net worth. And while there are no guarantees, it is still a better option for investments. So before you buy your first home, make sure you’ve done your homework and take the above tips into consideration.

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About the Author: Jess

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