Tips for First-Time Home Buyers
Purchasing a home is one of the most important rites of passage towards the American Dream. Besides the intangible benefits, homeownership lets you build equity, and is the single biggest tax break available to most consumers. If you are considering buying your first home, we would like to help you be fully prepared for financing and real estate goals in order will help create a smooth and efficient home buying process.
Check Your Credit Score
Lenders will put a lot of weight on your credit score, so you want to make sure to have your credit in order. They will determine how much you qualify for in a mortgage based heavily on your credit. Use extra cash to eliminate credit-card and other high-interest consumer debt even if that means you can put down less on your future home.
Create a Housing Budget
Have a clear understanding of your budget each month, and do not spend more than 30% of your gross monthly income on your home mortgage. This includes your interest, principal, homeowners insurance and taxes. You don’t want to put yourself in a financial bind that you are constantly struggling to maintain each month.
Save Up for Your Down Payment
Begin to save the difference between your monthly rent now and what you plan on your monthly mortgage being. This will prepare you for what the monthly payments will look like once you move into your home and help you make any needed lifestyle adjustments now.
Set Out Your Needs, Wants and Goals
You’ll want to make two separate lists based on you (and your family’s) needs, wants and financial goals. Whether it is location, condition, price or certain amenities, your needs should be those things you absolutely require, while your wants will be those items that you would prefer, but are willing to compromise. With this list, you will quickly narrow down your home search for what you can live with and what you can afford in the long-term! You will also want to choose a neighborhood at this time; each city has a unique atmosphere and things to offer, so you’ll want to find the area that suits you the best
Find a Reputable Real Estate Agent
Find a real estate agent who has experience in your part of town. An agent who has years of experience in the area you want to move to will be a great asset in helping you find the right home which best fits your needs and lifestyle.
Find a Lender
Meet with a lender before you begin looking at homes and get prequalified. You will be able to search more effectively online or when you begin working with a real estate agent if you know exactly how much dough you have to invest.
Make an Offer & Get a Home Inspection
Work with your agent to determine the fair market value for your chosen home and make an offer. Then be sure to have the home inspected before the sale closes. This is very important! Even if the home looks perfect inside and out; there is no way of knowing what issues there may be without a home inspection. You don’t want to buy a home only to find that its foundation is subsiding or the roof has dire water damage. Having the home thoroughly inspected allows you to know exactly what you can expect in the home you buy.
Finalize Your Sale
Once the contract is signed; you’ll still want to stay in touch with your agent and lender. There are always last minute finalization procedures which need to be closed by each party. And see your trusted financial adviser for assistance with tax planning for the following quarter or annual filing date.
We hope that these ten tips will help you gain further insight into buying a home and what you are likely to experience. Our goal is to make the home buying process as stress-free as possible!