Purchasing a property for the first time can be daunting. As soon as you think about buying a house, you may be tempted to go shopping on different websites and apps. But before you do so, educate yourself and check these tips for first-time home buyers. The crucial pointers will help you in your journey to homeownership.
Before you can truly understand and be ready for a commitment to homeownership, read up and educate yourself. Purchasing a home is a commitment and some may not be ready for it. Here are the information you need to read and learn before you go shopping for that property:
- Loan options (conventional loans, FHA loans, USDA loans, VA loans).
- Check if you are qualified to have access to state programs, tax breaks, and down payment assistance.
- Difference between a prequalification letter and a preapproval letter.
- Closing costs (e.g. appraisal fees, attorney fees, escrow fees, homeowners insurance, title insurance expenses, property taxes)
- Down payment
- Comparison of mortgage rates and fees from multiple lenders
- Move-in expenses
Start saving early
Consider the main costs when saving for your home. Decide for the total money target and a deadline for getting there. Save for a down payment, closing costs, and move-in expenses. Set a savings target, make your saving automatic, and look for ways to minimize expenses when saving for a house.
Check and strengthen your credit
Most often, the better your credit score is, the lower the interest rate you’ll get on your mortgage. By checking your credit before you begin your home searching will give you time to correct any issues and improve your score ahead of time. To get your credit ready for mortgage, here are simple steps:
- Pay credit card bills on time. Late payments can drop your score.
- Keep your credit lines below 30% of their maximum. When the utilization rate of your credit card is lower, your credit score typically rises.
- Check your credit history and dispute any errors.
- Avoid opening a new line of credit like a credit card or a personal loan.
Getting your existing debt under control is crucial before you begin your mortgage application and house-hunting.
Get a preapproval letter
It is a good idea to get a mortgage preapproval before you begin searching and comparing properties. A mortgage preapproval letter is a document that tell sellers that your offer is real and that you have a backing of a lender. The letter tells exactly how much loan money you can get based on your credit score, bank statements, and other financial information.
Getting pre-approved also saves you valuable time as it identifies how much you can afford. This helps in considering the properties you will search to meet your price level.
Talk to a trusted Realtor®
Navigating a real estate purchase is a complicated process hence you need an experience professional to help you. Your trusted real estate agent can help you save time and money as they know the ins-and-outs of comps, pricing, negotiations, legal processes, and details about the neighborhood where you want to buy your property.
Your first home is one of the biggest purchase you will make and you want to get this right. It doesn’t have to be overwhelming. We hope that these tips will help as you traverse to this exciting stage of homeownership!