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It’s exciting to be a first-time home buyer! But we understand how challenging it can be, especially when homes are selling for over $350,000 on average in Sacramento, California. Not to mention that the available properties are selling in less than two weeks. 

With such real estate trends, you may be tempted to make an impulsive purchase that could harm your financial goals and keep you paying a mortgage for longer than anticipated.

We’ve compiled 13 pointers for first-time homebuyers as they navigate the house-buying process. Put these tips into action right now to make your first house a blessing rather than a burden.

1. Examine and Improve Your Credit Score

Your credit score affects your eligibility for a mortgage and the interest rate lenders are willing to offer you. Your credit report and score will help your lender determine the best interest rate for you. 

They’ll also check your current credit history to see how you pay and how well you manage your money. The better your credit, the cheaper your interest rate will be.

2. Save For a Down Payment Ahead of Time

It takes the typical American homeowner 6.5 years to save for a 20% down payment, so it’s crucial to start saving early. The amount of money you’ll need for a down payment can vary depending on the type of loan you choose and the lender.

Some conventional loans for first-time home purchasers with good credit allow for as little as a 3% down payment.

3. Build an Emergency Fund

Don’t even think about purchasing a home until you have three to six months’ worth of living costs in an emergency savings account. There will be significant upfront costs when buying a house that many first-time homebuyers aren’t prepared for or even know about. 

In addition, medical emergencies, automobile accidents, and job loss are examples of unexpected standard costs that you may need extra money to cover while settling into your new home.

4. Know the Hidden Expenses of Homeownership

Buying your first home is just the beginning of many things you’ll need to cover. You’ll also be accountable for property taxes, insurance, and utilities. Before you buy a house, calculate the expenditures. 

Tip: Look up previous property tax bills in county records to get an estimate on how much they will cost you.

5. Compare Quotes From Multiple Lenders

Mortgage rates vary from one lender to the next, making comparison shopping an essential part of the home-buying process.

Get quotes from at least three to five different lenders, paying close attention to the annual percentage rate (APR), extra fees, and total loan expenses— both upfront and over time.

6. Get Pre-Approved Before You Make a Bid

A pre-approval letter is a letter from a lender stating that you have been authorized for a particular loan amount. Pre-approval lets sellers know you’re serious about buying a house, which is an excellent method for first-time buyers to have a leg up in a competitive market.

Your lender will need to review your financial information (proof of income, taxes, etc.) and submit your loan for preliminary screening to get pre-approved.

7. Look Into First-Time Home Buying Programs

Many states, cities, and counties provide first-time homebuyer programs that frequently include low-interest mortgages, closing costs help, and down payment assistance. Some first-time homebuyer programs offer tax rebates as well.

8. Look at FHA, USDA, and VA Financing Options

FHA, USDA, and VA loans are unique options to explore if you only have a minimal down payment. These offer smaller down payments and can help make house ownership more attainable. 

FHA loans may be utilized anywhere; however, USDA zero-down loans are only available in rural regions. In addition, military personnel, veterans, and spouses are eligible for VA loans, which may also offer no down payment.

9. Choose the Ideal Property and Neighborhood

Given your lifestyle and budget, weigh the benefits and drawbacks of various types of houses. If you want to establish or extend your family, buying a home with more space may make sense. 

Make a comprehensive examination of possible neighborhoods, and then choose one with crucial features to see how it works. At the end of the day, you’ll want to buy a house that makes life more enjoyable. 

10. Stick to Your Budget Plan

You may be pressured to spend more than you want by a lender, or you may feel pressured to spend more than you can comfortably afford to beat another buyer’s offer. Set a pricing range depending on your budget and adhere to it to minimize financial trouble in the future.

11. Carefully Select a Real Estate Agent

An excellent real estate agent will search the market for houses that fit your requirements and assist you with negotiating and closing. Get agent recommendations from other recent property purchasers and conduct interviews with them. 

When chatting with possible agents, inquire about their experience working with first-time homebuyers in your area and how they intend to assist you in your search.

12. Choose a Reliable Home Inspector

A house inspection is a detailed examination of the building’s construction and mechanical systems. Professional inspectors check for possible issues so you can make an educated choice about whether or not to buy the property. 

You may then use their findings to bargain with the seller, asking them to perform the repairs themselves or providing you with the credit to do them yourself.

13. Make Deals Whenever Possible 

You’ll be able to save money by requesting the seller to pay for repairs upfront or lowering the price to cover the expense of future maintenance. You might also ask that the seller pay a portion of the closing fees.

However, keep in mind that the lender may limit the seller’s ability to pay a portion of the closing costs, so you may need to be creative in the way you approach making deals to recoup some of the fees.

Final Thoughts

There is a lot to consider when purchasing your first home. Using these tips above can help you avoid some of the typical first-time homebuyer mistakes. If you are in the market to buy your first house in Sacramento, contact us today, and we will help you find the perfect place to call home.   

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