Buying a home for the first time is a daunting task. Be prepared ahead of time by educating yourself on as much as you can about the process, so you know what to expect along the way. Keep these five tips for first-time home buyers in mind as you navigate the process from renting to owning your own home.
Tips for First-Time Home Buyers
1. Learn your Credit Score
Financing is something you want to work out before you even start house hunting. Lenders have a list of qualifications that you must meet to qualify for a mortgage. You need to have income, an acceptable debt-to-credit ratio, and stability in your employment, but the biggest factor is your credit score. Borrowers with low scores, typically below 620, will not qualify for many loans. The best interest rates are limited to buyers with scores of 720-740 or higher. Find out yours and try to improve it before applying for a loan.
2. Know your Budget
Qualifying for a mortgage doesn’t mean that you need to buy a house at the upper end of your approval amount. Know how much you can afford and stay within your budget when looking at homes. Most experts advise not to spend more than 30 percent of your monthly income on the principal, interest, insurance, and taxes combined.
3. Save, Save, Save
Save as much money as you can for a down payment if you know that you’ll be shopping soon. A bigger down payment reduces how much you need to pay every month and will save you thousands of dollars in interest over the life of the loan. You’ll also avoid having to pay private mortgage insurance, or PMI, by putting down at least 20 percent down. Get accustomed to how much you expect to pay for a mortgage by placing money in savings that equals the difference between the mortgage and your current rent payment. It will allow you to adjust to having a higher monthly expense and give you room to adjust your budget if needed.
4. Put In a Reasonable Offer
If the housing market is hot, then houses aren’t staying on the market very long. Put in an offer as soon as possible if you fall in love with a home, but don’t try to low-ball the seller. It’s likely they’ll reject the offer and you will be outbid. Get advice from your realtor on how to put an offer in and what a reasonable amount is depending on what the seller is asking for.
5. Get an Inspection
One of the most important tips for first-time home buyers to keep at the top of their list is to get an inspection on any home you intend to purchase. A home inspector is trained to examine the critical components of a house and evaluate their condition and possible issues. You can examine the report and make requests or even revoke your offer if any major issues surface during the inspection, but there is a solution to nearly every problem. It is essential you’re aware of the full picture of the home you are buying so that you can budget for maintenance and necessary upgrades or repairs in the future.
Don’t have a stressful and aggravating experience on your road to homeownership. Utilize these tips for first-time home buyers to prepare yourself ahead of time. You’re more likely to find the home you want at a price you can afford by following these tips.
Home Inspections and Beyond offers home inspections for buyers, in addition to a variety of home inspection services. We are experienced in working with first-time homebuyers and helping them have a positive experience while buying their first home. Contact us to schedule our services.