There are fewer things in your adult life that can be more stressful — and exciting — than buying a first home.
Like other big projects, a successful homebuying experience relies on ensuring you have the right details and information from start to finish.
These first-time homebuyer tips will help you navigate the homebuying process, alleviate some stress, and hopefully save you money in the process.
1. Start Saving Sooner Rather Than Later
As obvious as it seems, one of the most important details in buying a home is to start saving money sooner rather than later.
To know how much you should save, you need to determine how much you can safely spend on a home.
Take into consideration your income, debt, and monthly expenses to help you decide what you can comfortably afford.
You will need money for:
- Closing Costs: Fees and expenses associated with finalizing the mortgage amount. It is possible to ask the seller to pay a portion of the closing costs, allowing you to save on some of the expenses.Additional fees to consider are the home inspection and septic inspection. Don’t be afraid to shop around for the best price when it comes to these.
- Down Payment: Your down payment will depend on the type of mortgage you choose. Homebuyers can choose from options like 30-year fixed, 15-year fixed, and 10/1 Adjustable Mortgage Rate (ARM). Some conventional loans require as little as 3% down.Other loans can require a larger deposit, like 20% down. No matter the amount, it can be hard to save. Setting up a goal can help keep you motivated.
- Move-in Expenses: The expenses won’t end when you sign your name on the dotted line, you will still need to have money saved for additional expenses.Additional expenses can include hiring movers (or supplying food for friends and family who help you move), any necessary repairs, and updating paint colors or furnishings.
2. Research First-Time Homebuyer Programs
Some financial lenders offer a program specifically for first-time homebuyers to help secure their dream home.
These programs, like the Homebuyer Dream Program offered by Hudson River Community Credit Union, combine low-interest rate mortgages with down payment assistance and closing cost assistance.
Qualified buyers may receive a grant to be used for the down payment and/or closing costs. Borrowers must be first-time homebuyers who have not owned a home in the past three years.
3. Compare Mortgage Rates & Fees
As consumers, people research prices for just about everything before making the leap and purchasing a product.
The same care and consideration should be given when looking at mortgage rates.
Mortgage rates can vary depending on the type of mortgage, duration of the lending period, and sometimes the lender.
It’s also possible for mortgage rates to fluctuate with regularity — sometimes daily, weekly, or monthly.
So, as soon as you’re ready to purchase a home, you are urged to lock in an interest rate with a letter of preapproval.
4. Get a Letter of Preapproval
A mortgage preapproval letter is a letter that confirms for sellers and realtors that a lender will commit to loaning you a certain amount of money under specific terms.
This letter also shows real estate agents that you’re a serious buyer, rather than someone merely scoping out the interior of their neighbor’s house.
Having the letter could possibly give you an edge over someone competing for the same home.
Apply for approval once you’re ready to start looking for your home. Once you do so, the lender will pull your credit history, review documents verifying your income, assets, and debt.
5. Carefully Choose a Real Estate Agent
A real estate agent’s job is to scour the market for possible homes that meet your needs and price point. This person should also guide you through the negotiation and closing process.
Almost everyone knows a real estate agent or has a mutual connection with one. Even if your friend claims to have a cousin who is the best realtor in town, you should still do your homework when searching for a real estate agent.
While deciding on the perfect real estate agent, ask about prior experience helping first-time homebuyers, and how they plan to help you.
Take a moment to look at the agent’s social media presence and reviews. These can give you an indication if the person is a good fit for you.
6. Stick to Your Budget
It’s possible for a lender to offer you more than you are comfortable spending.
Or you might feel pressured by family, friends, or your real estate agent to purchase outside of your comfort zone.
Avoid stress and anguish down the road by establishing a price limit that gives you some wiggle room for bidding in a competitive market, without blowing your budget.
7. Make the Most of Open Houses
Virtual tours have become quite popular in recent years, but especially during the coronavirus pandemic.
These tours allow you to view a home at a time that is convenient to you and will show details that pictures might not catch.
Although this option is helpful, it should not replace an in-person visit.
Open houses give you the opportunity to get an up-close look at every area of the home. Visiting a house in-person will open your senses to potential scents from the carpet, overall condition of the home, the electrical, roof, and plumbing system.
It also gives you the opportunity to ask the seller’s real estate agent as many questions as possible. If you can’t ask a question, you will have the agent’s name and contact information, which will allow your agent to find out more information for you.
8. Start Saving for Your Future
If you want to get started with investing in your future, save for your first home, and discuss the different mortgage options available, our mortgage specialists will help you each step of the way.
Contact us today to begin investing in your dream home.