There’s nothing like the feeling of owning your own home. Purchasing a house is a big deal, and it can be a lot of fun too! However, buying your first house can also be a stressful and confusing process as there are several steps to take. As first-time home buyers, figuring out how to get started and what to do next can be challenging. However, when you have the right resources at your fingertips, taking the proper steps can be easier than you expected.
There is a lot of information out there for people who are buying their first home, and we want to make the process as easy as possible for you by providing you with the top five most significant tips for first-time buyers.
Tip 1: Explore Mortgage Options & Assistance Programs
Many buyers are not smart with their credit when they prepare to buy a house. First-time home buyers often make huge credit mistakes, such as applying for new credit cards and opening another account right before purchasing a home.
First, you should focus on improving or building your credit score before considering getting a mortgage loan. Remember, your credit score plays a significant role in determining whether you will get approved or not for a new loan.
It will also determine the loan term and interest rates if you qualify for a loan. Once you’ve built your credit wisely, you can start to research your options.
Check All Types of Mortgage Loans Available
A conventional loan isn’t your only option when purchasing a home. There is a good selection of mortgage loan options for first-time homebuyers, including:
- USDA loans (geared toward rural homebuyers )
- Federal Housing Administration (FHA) loans
- VA loans (for veteran and current members of the armed forces)
- Conventional mortgage loans
However, there are different eligibility and down payment requirements to meet. So before applying for one of the loans above, find out which types you qualify for and what steps need to be taken.
Compare Fees and Mortgage Rates
Okay, now that you have chosen a loan that works best for you, reach out to multiple lenders and request estimates for that particular type of loan/mortgage. Speak with a realtor to help understand all your loan options and compare the interest rates before deciding.
Don’t rush into buying discount points, aka fees that should be paid upfront to decrease the interest rate. This only makes sense if you plan on staying in the house for many years and have the extra cash upfront to spend on this option.
Research Assistance Programs for First-Time Homebuyers
Not everyone can get approved for their first mortgage loan, or you may not qualify for a specific type of mortgage. In that case, try researching the local assistance programs in your area that offer first-time homebuyers programs to see if they can help you.
Are you interested in buying a house in Sacramento but can’t get pre-approved for a mortgage? If so, you can apply for the first-time homebuyers programs in California offered by CalHFA.
There are also national loan programs that include low down payments and flexible credit requirements. Look for ones that combine closing costs and down payment assistance with low mortgage rates.
Some first-time homebuyer assistance programs come with tax credits, which are definitely worth considering when looking for the best mortgage options.
Tip 2: Start Saving For Your Down Payment and Other Expenses Early
Start saving now rather than waiting to find your dream home. Set up a transfer that will automatically be taken from your paycheck and deposited into your savings account. That account can also be used when setting aside tax refunds and bonuses earned at work.
It’s important to monitor your monthly expenses and identify ones that you can eliminate. Every penny you can save will put you that much closer to having the money needed to purchase a new home.
Remember, there are many costs affiliated with buying a home, including the down payment, appraisal fees, moving expenses, home inspections, and closing costs.
Keep in mind that there will also be additional expenses upon the home closing, such as unplanned repairs, immediate maintenance, upgrades, renovations, and decorating costs.
So you will need some money after moving in, and that’s why you should try to boost your savings every chance you get!
Tip 3: Hire a Real Estate Agent Instead of Doing Everything Alone
If you want to find the perfect house without putting in a lot of time and effort, work with an experienced realtor or real estate agent. They can make the home buying process less daunting by working on your behalf.
Avoid relying on your seller’s agent. He is not your buddy or someone who represents the first-time home buyers’ best interests. Instead, bring in the big guns and hire a qualified real estate agent who will be your valuable partner.
You will want to choose one who will support you all the way. In addition to requesting references and interviewing several agents, you need to get referrals from recent clients. An excellent real estate expert will do the following for you:
- Search the local real estate market for houses that fit your needs and budget. They will show you homes in desirable neighborhoods that meet your requirements.
- Use their extensive experience working with first-time home buyers and helping them understand their priorities as homeowners.
- Negotiate contract terms to ensure nothing goes wrong with the home sale.
- Give you an idea of how much you should offer for a home and submit the offer letter.
- Guide the buyer through the closing process.
Tip 4: Pay For a Property Inspection
Many first-time homebuyers overlook this step, although it can provide a thorough, genuine house assessment. That said, consider hiring a professional inspector to check if there are any potential issues with the home.
Also, many homebuyers confuse a home inspection with an appraisal. You will only get a rough idea of the house value based upon comparable homes during an appraisal, while the inspection will shed light on specific issues found with the property.
First-time homebuyers usually attend the inspections, and if you have any questions about the home, this is an excellent opportunity to ask them on the spot while walking with the inspector. They should inspect every part, including crawl spaces and roof.
Be sure to ask if the inspection includes checking for infestations, pests, mold, etc. since most standard inspections do not cover these topics. If the house is situated in an area prone to flooding or other inclement weather conditions, it is probably worth paying extra for these tests.
Tip 5: Buy the Right Homeowners Insurance
Before closing the deal, the lender will ask you to purchase homeowners insurance. Aside from repair costs, it is meant to cover the expenses of replacing belongings in case of damage. If you have to rebuild, the home insurance will help you cover the costs. Some also provide personal liability coverage.
Depending on the type of loan you receive, you may be required to carry specific mortgage insurance for a predetermined amount of time. Be sure to get all the details of what you need to have and if you have a choice on the insurance company.
Buying your first house should be a fun and exciting adventure. Don’t allow the process to scare you or make you believe that you can’t qualify for the home of your dreams.
Contact us today for more details on how to buy your first home without all the stress and headaches of navigating the mortgage world. We can help you get the house you deserve!