Buying a home is a huge life decision and can be especially nerve-wracking when you’re buying for the first time. Just like anything that you do for the first time, there’s a learning curve that you have to climb before you can get a good sense of the best strategies for home buying. That’s why we’re writing this guide. We want to give you a head start as a first-time home buyer with a few valuable tips that can help to steer you in the right direction. Let’s take a look at three essential tips for first-time home buyers.
Tip #1: Find a Mortgage Rate That Works For You
When you’re looking to buy a home, once you know that you have the budget to do so, you’ll want to start shopping for mortgages. APR rates, mortgage length, and down payment amount vary based on your credit line, so you’ll want to talk to an HRCCU mortgage specialist to give you an idea of what kind of mortgage best fits your needs. HRCCU home buying rates are as follows:
- 30-year fixed at 4.125% APR.
- 20-year fixed at 4.000% APR
- 15-year fixed at 3.650% APR
- 10/1 ARM (Adjusted Rate Mortgage) at 3.375% APR
Many lenders also require home buyers to purchase private mortgage insurance (PMI) if they are unable to make a down payment of 20% on their loan. This cost can be particularly difficult on first-time home buyers who might not have the income to afford the added cost of PMI. No matter the down payment, you can avoid having to pay PMI with an HRCCU mortgage. This could result in a savings of $1,000 or more per year for the home buyer.
Tip #2: Search the Market for the Right Home
Once you’ve secured yourself a mortgage loan, or at least pre-approval for a mortgage, you’ll want to actually start looking at homes in the area that you’re interested in. One good rule of thumb is to create two lists when you’re looking for a home: one with the absolute must-haves that you want for your house and the other with things that you’re a little more flexible on. No home is going to be absolutely perfect (at least at first), so it’s good to know the things that are deal-breakers before you start looking. This will save you time in the long-run as you will be able to parse out properties that don’t have what you’re looking for.
A few other things to consider when you’re scouring the housing market:
- Neighborhood and community are important. You don’t want to buy a home only to find that there aren’t things nearby that you enjoy or that you can’t stand your neighbors. Get a feel for the community you’re moving into before making the big decision.
- Become familiar with local taxes. Property taxes, school, and other taxes can vary substantially from county to county, so make sure that the tax rates are something that you’re comfortable with, and more importantly that you can realistically afford.
- Proximity to work, friends, and family can be a big deal. You might find a great home for a good price, but you could end up losing all that savings on gas and car repairs if you end up having to drive long distances to get to the places you typically go.
Tip #3: Be Diligent
If you’re using a real estate agent to help you find a home, this is a big part of their job. But even with a real estate agent, there are things that you’re going to want to be extremely mindful of before closing on a house. When the home is inspected before closing, do some research on the inspector, and make sure that they are reliable and trustworthy. Be present at the entire inspection, and don’t be afraid to ask as many questions as you feel you need to; this is a huge investment, and you’re at liberty to get all the information that you feel you need before committing.
It’s also not a bad idea to do some research on the home itself, either through a realtor or looking into property records, which are available to the public. If you see something that seems like a red flag, try to get more information. This also goes for potential repairs that are needed in the house; if you feel that after inspection you’re uncomfortable with the price of repairs (for example the ventilation system needs repair or the roof needs to be replaced), request that the current owner makes these fixes before sale. If there are serious repairs that you cannot afford to make, and the present owner won’t budge, don’t feel obligated to follow through on the sale.
While these are just a few pieces of advice to consider when starting the home buying process, they’re important ones. Part of taking the plunge into becoming a homeowner is making sure that you’re doing so in a way that is financially viable and responsible. At HRCCU, nothing matters more to us than your financial health and security, and that’s why we want to help you make the right decision from mortgage to closing.
To learn more about the mortgage approval process, we’d recommend reading our companion piece, “5 Steps to Mortgage Approval”. It’s never bad to be more educated, especially when it comes to your finances!