Many people dream of becoming a homeowner. It can be such an exciting experience. However, buying a home can be stressful and overwhelming. Therefore, here are 7 tips for first time homebuyers.
1. Get the Help of a Real Estate Agent
You need the assistance of an experienced agent who can walk you through the home-buying process. She will be familiar with the housing market, and she can help you find the perfect home within your price range. An agent has negotiation skills, so she can try to get the price as low as possible. In addition, there is so much paperwork involved when buying a new home. An agent will help complete the paperwork. Any mistakes can cost you money, so she will make sure the paperwork contains no errors.
2. Check your Credit Score
If you have bad credit, it will be difficult to qualify for a loan; however, with an FHA loan, you can have a score as low as 580. https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/ states that you can check your credit score without it hurting your credit. It is a good idea to look at your credit report to make sure there are no mistakes. You want to make sure there are no surprises when a lender checks your credit.
3. Get Pre-approved for a Mortgage
You should apply for a mortgage and get pre-qualified. You will then know exactly how much you can afford for the new home. When you find a home you like, the seller will know that you already have the funding available. You will have the advantages if other people are looking for the home. The most popular type of mortgage for a first-time homebuyer is an FHA loan. According to https://www.usa.gov/mortgages, to qualify for these loans, you can have a down-payment as low as 3.5%, and you can have less than perfect credit.
4. Have Additional Money Saved
In addition to your down payment, there are other expenses that you might need to pay for. You might need money for closing cost, or you might need money for the home inspection. Other expenses you might be required to pay at closing include the lawyer, credit report, appraisal, and homeowner’s insurance. Before you start searching for a home, it is a good idea to pay off your debt, so you can save more money.
5. Keep Checking the Rates
The interest you will pay on the loan is very important. You want to get the lowest possible rate. Interest rates can change frequently. When you find a low rate, lock it in. Your rate will be good for a certain number of days, and it cannot change. Therefore, if interest rates increase, you will have secured your low rate. Normally, a rate lock is good for 30-60 days, So, you hopefully you will buy a home before the rate lock expires.
6. Know your Budget
You want to create a budget of your monthly obligations, so you will know how much you can afford. You to not want to spend more money than you can afford. That can get you in trouble later. You might find your perfect dream home that might be just above your budget. Do not buy it if it is out of your price range. You can find affordability calculators online that will help you determine your price range.
7. Go to Open Houses
After you find the right neighborhood, explore the houses in that area. It might not be the right home for you, but you can get an idea of what you like and what you do not like. It is important to compare. You might not know what you want in your first home. Do not settle for the first house you see. Explore your options.
Buying a new home is a huge investment. There are so many decisions to make, so you want to make sure you understand the process. You can then enjoy a bright future in your new home.