Advice for First-Time Home Buyers
Buying your first home can be intimidating. There are a lot of moving parts that require a close attention to detail. You’ll need to go through the necessary steps and requirements regarding the approval process. While this is an exciting moment, the thought of such a big financial commitment can cause a lot of anxiety. Luckily, buying your first home presents you with a number of unique advantages. There are available tax breaks, federally backed loans, and low interest rates available to first-time home buyers in an effort to encourage more people to enter the market. To make sure that you’re having a smooth experience from start to finish, here is a little expert advice for first-time home buyers.
Advice for When You’re Preparing to Buy
If you know that you’re going to buy a home in the future, it’s a good idea to start getting prepared early. Even if you’ve just begun to consider real estate, small steps now can have a big impact later.
1. Save Early
There are a lot of costs that go into buying a home. You’ll need to save money for your down payment, closing fees, and moving expenses. Try to think about what type of mortgage you’re going to get and use a down payment calculator to set a goal for your savings. The more you put down on a home, the less your mortgage payments will be so it’s a good idea to save early to avoid future financial stress.
Keep in mind that the worst thing you can do when buying a home is drain your savings. Having an emergency fund or a little savings is important. Make sure that you at least save about 6 months’ worth of living expenses—a year if possible. This will drastically reduce your anxiety and unnecessary risks.
2. Familiarize Yourself with Hidden Costs
While many people focus on the down payment, there are actually quite a few hidden costs associated with buying a home. Familiarize yourself with them so you can be prepared when it comes time to pay.
3. Determine Your Budget
Before you start looking at the market, set your budget. You don’t want to buy a home that you can’t afford—all it does is cause stress and increase your risk for foreclosure. Unfortunately, many people start looking at houses before setting a budget and may end up being disappointed by the disparity in style, features, or size.
4. Know Your Credit Score
Make sure that you check your credit score. If it’s good, keep doing what you’re doing. If it’s low, take initiative and work on strengthening it before you start inquiring about mortgages. By tracking your credit score, you’ll get a better understanding of how your purchasing decisions impact your number.
5. Take Your Time
The process of buying a home is complicated. There are a lot of moving parts to consider and if you go too fast, you might overlook something important or rush into the wrong lending option. Create a plan and give yourself at least a year to move through the timeline of buying a home.
Advice for Selecting a Mortgage
There are many advantages to being a first-time homebuyer. You’ll have access to different programs, a number of tax breaks, and federally backed loans that are tailored to those new to the real estate market. With the vast number of options available, it’s going to take some time to fully understand what you have access to. When selecting a mortgage, do the research so you can find the best deal for a successful financial future.
6. Explore Your Options
There are many different types of mortgages available when you’re buying a home. First-time home buyers have unique options for low interest rates and special mortgage terms. You can choose a conventional mortgage, a loan from the Federal Housing Administration (FHA), USDA loans, and VA loans.
Conventional mortgages aren’t federally backed but they require only a small down payment. FHA loans are federally insured and have less strict requirements in terms of finances and credit scores. USDA loans are backed by the U.S. Department of Agriculture and are tailored towards more rural homes. VA loans are supported through the Department of Veterans Affairs and are specifically for veterans or active service members.
7. Research Assistance Programs
In addition to unique lending options, you may be eligible for first-time home buyer assistance programs. Check your local area to determine if you have any options and talk to your real estate agent about potential tax credits.
8. Compare Rates and Fees
Never go with the first lender you talk to. Take the time to compare mortgage rates and fees across different lenders, mortgage types, and agencies. This will create an opportunity to find the best mortgage, lowest interest rates, and discounted costs.
9. Get Preapproved
After comparing mortgage terms from different lenders, determine which one that you want to work with and get preapproved. By having a preapproval letter on hand, you’ll show sellers that you’re serious and streamline the buying process later on.
10. Advice for Purchasing a Home
When you’re ready to purchase your home, there are certain things that are going to make the process easier. One of the most important actions you can take during this step, or even during the mortgage process, is to find a good real estate agent and figure out what’s important to you in homeownership.
Use a Trusted Real Estate Agent
Finding the right real estate agent makes a world of difference. Make sure that you work with someone you feel comfortable with and that you trust.
11. Focus on Location and Neighborhood
When beginning your house hunt, try to focus on the neighborhood you want to live in rather than the house itself. You can always work on renovating your house and fixing things that you don’t like, but you’ll never be able to change where the foundation sits. Look at school districts, safety, and proximity to work.
12. Determine Your Must-Haves
You should also make a list of all of your absolute must-haves in a home. This might include things like number of bedrooms and baths, a backyard, or a garage. Try to keep it simple and add those smaller details into a “want” list. If you’re working with a limited budget, it can be difficult to satisfy a long list of demands.
13. Visit Open Houses
After you’ve gotten an idea of location and all of your needs, the fun begins. Visit as many open houses as possible, even if you’re not interested in the house. This will give you a better idea of things that you like or dislike in a home so you can further refine your search. Just make sure that you stick to your budget when it comes down to the final decision.
Things to do Before Closing
Finding a home that you love is exciting, but it’s not the end of your journey. Closing is one of the most stressful parts in the homebuying process. With a professional real estate by your side, this will be easier to manage. Just don’t forget to take care of the basics.
14. Get a Home Inspection
Once you’ve found a home that you love, get a home inspection. Even if everything looks like it’s in perfect order, there are certain problems that can be hidden below the surface. Make sure that your home’s structural and mechanical systems are all in working order so you can make a more educated decision. If you do find something wrong, and you still want to move forward with an offer, you can use it as a negotiation tool to reduce the asking price.
15. Make a Competitive Offer
If there are large-scale things found in the home inspection, make a competitive offer with the sellers. Ask them to take care of the repairs in advance so the house is worth the asking price. If they don’t want to, ask them to lower the price to cover the costs. Work with a seasoned real estate to navigate the offer and put yourself in the best position for success.
16. Prepare for Closing
When your offer is accepted, it’s time to prepare for closing. Make sure that you buy homeowners insurance and are ready to cover all of the closing costs. Then get excited about moving into your first home!
Whether you’re a first-time home buyer or well versed in real estate and ready to move on to your next adventure, First Star Realty can help. Our team of highly seasoned realtors provides five-star realtor services to clients in and around Northwest Arkansas. We’re committed to helping you find the perfect home using a personalized approach. Call us today at 479-267-1600 or fill out a contact form on our website.
