What an excitement it is to own a home for the first time. No more fighting over parking spaces, the unexpected rent increases are off your shoulder, and now you can enjoy peace of mind away from those noisy neighbors.
The last few years have seen an increase in homeownership, with the U.S recording a rate of 65.8% in 2020- quite a significant increase in the number of people living in their homes.
As a first-time homebuyer, you need lots of information to make the right choice.
Like any other project in life, Yu need all details from start to finish.
Below are tips that are helpful to you as a first-time home buyer, help you navigate the process, and save money in the long run.
Start Saving Before
When buying your home, there are several costs that you must get ready for;
A Down Payment: You’re most likely going to buy your home through a mortgage, and the down payment required will depend on your lender. Some will allow you to pay as low as 3%, but even that small amount can be a challenge to save. For instance, if you’re buying a home at $300,000, the 3% down payment will be $9000, and saving that amount of money is a tall order for many.
However, if you want to achieve your goal, you’ve to be determined, layout a clear savings plan on how you’ll accumulate that amount.
The Closing Costs: There are also other fees that you pay to finalize your mortgage, ranging from 2-5% of your loan amount. You can ask your seller to pay these costs and thus reduce the expenses like home inspection fees by shopping around.
Move-in expenses: when you pay for your home, the next thing is moving in and occupying. You’ll need to prepare the move-in by doing some repairs, furnishings, and upgrade.
How Much Home Can You Afford?
Think of the much you can spend on a house before you begin shopping. You can set a price range using a home affordability calculator. That’s based on your income, down payment, debt, your credit score, and when you plan to move in.
Take time and go through the home buying process guides and acquaint yourself with the home buying market. And what it could mean to your overall budget. You may get late thinking that you must raise a 20% down payment when in reality, you only need some 3%.
If you offer to pay some significant down payment, lenders will give you the best rates, but from experience, not many people have such cash to pay as a down payment.
Other lenders don’t ask for a down payment, and that’s why you need to take time and do some research on the available financiers.
You may also need to find out how much you would pay if you took the mortgage for a few years. In this case, you’ll pay less interest, but the repayments will be pretty huge. If you’ve some excellent income, then that’s the best way to go.
You may also have saved a good amount of money, and therefore you don’t need to get a mortgage for the entire amount. Pay the down payment and get credit for the remaining balance to lessen the burden of high repayments.
Get The Right Home for You
Before you think of buying that home, you need to consider a few factors like your family’s size, the preferred neighborhoods. Are schools a factor in your choice and based on your assets and income, what kind of a house can you afford?
For some first-time home buyers. It’s the living in a specific neighborhood that they value more than any other, while for others; home is all that they cherish regardless of the neighborhoods.
All you need to do is look for a home in a neighborhood you desire, and if you don’t get a perfect fit, you may have to be realistic and compromise on a few things.
Check out the advantages and disadvantages of the different types of homes based on your budget and lifestyle. A condominium, for instance, is more affordable than a single-family home- but again, shared walls could mean less privacy, something you may not be comfortable with.
You may also consider buying a fixer-upper, a single-family home that needs some renovation. However, that would mean you set aside some amount for such costs. You can also opt for a Renovation mortgage finance which finances the home price and the renovation costs.
Considering your long-term needs is also crucial; will a starter home or forever home serve the purpose?
If you are still thinking of getting more children or expanding your home, leave some space in your home where you can have an extra room when the family grows.
Check Your Credit Score
One thing that will determine whether you qualify for a home owners loan is your interest and credit history. Before you buy your home, you’ve to take time and strengthen your credit score. Lenders pay keen attention to this, and if your credit score is high, they will comfortable giving you a mortgage of any amount.
As a first-time buyer, you need to look for a professional financial advisor to guide you through acquiring a home, the best financiers, and the pitfalls to avoid. It’s a serious investment you’re making, and thus no need for a rush; take time and choose a home that will serve your purpose.