Buying a home for the first time is one of the most rewarding experiences you can have. You’ve saved up money, found a place you see yourself living in for years to come, and you’ve made an important investment and commitment to your future.
However, buying a home can be a stressful experience – there is so much paperwork, so many things to consider, and, to make a return on your investment, you must commit to living in a single location for a long time.
Even in these uncertain times, homeownership is still steady, and if you have the credit and resources to do so, now is a great time to purchase your new home.
We want to share 6 tips to make buying your first home as easy as possible.
Know How Much You Need Up Front
Your price range will affect your down payment and loan from the lender (like a bank). You may be looking for a “starter home” for something more affordable and to build up a great line of credit, or you may be looking for a “forever home” that you’ll want to stay at for as long as you can. Knowing what you want out of the house will help you determine how much you’re willing to pay for a home.
A down payment is how much money you pay upfront for your house. You can put down as much as you want, but loans will usually require a certain % (based on the price of the house) to be paid as part of the loan. If you have great credit, you may only have to put down 3 – 5% on a home.
- The house you want is $190,000
- 3% of $190,000 = $5,7000
You’ll also need closing costs – fees that cover all the paperwork and administration needed to finalize your purchase. These costs are usually around 4% of the loan.
Know Your Options for Assistance
It helps a community when homeownership is increasing, so there are financial assistance programs at the city, state, and national levels to help first-time home buyers. Tax credits and low/no-interest rates are available, so find out what’s available to you.
Stick to the Plan
Before you start working with lenders on applying for loans, you need to understand your budget (which should have been done in #1 above).
Once you start working with banks, you may find out that you’re able to afford more than you thought (or be loaned a larger amount). While tempting, this should not change your budget. Remember, you aren’t just buying a house – you are buying a “home.” A “home” includes furniture, paint, and the other little things that turn a shell of a house into a place you are proud to live in. Don’t get greedy and get a larger loan just because you can – you want to set yourself up for a stress-free experience, and you won’t be able to enjoy your new home if you’re stressed out. After all, you don’t know how you’re going to keep making payments because you went over your budget.
Get Pre-Approved for a Loan
There are lots of people who say they are interested in buying a home, but they may not have done all the research or be ready to make the decision yet. Since the buying market is so competitive, you must show lenders that you are serious about buying a home. The best way to demonstrate your interest and reliability is to get pre-approved by your lender. They’ll look at your income, taxes, and other financial information to determine how much they would be willing to loan you. This pre-approval step is often overlooked in the home-buying process, so if you can do it, it will put you ahead of any other buyers who have not done it.
Who’s Gonna Handle It?
A large part of the home-buying process is all of the paperwork involved – between the bank, the homes, the surveys, the city – there are a lot of forms needed to transfer a house from one party to another.
In theory, you could handle all the paperwork yourself, but you risk missing something or doing something incorrectly. Especially for the first time, the best thing to do is to use a real estate agent. Not only are they experts in the process, but they can walk you through the entire process beforehand, so you know what to expect. They’ll also handle any negotiations on your behalf, which leads us to the last point.
Everything’s on The Table
When buying a home, besides the local/state requirements for paperwork, there are no rules – only guidelines. When you’re in the final negotiations, you can work with your agent to figure out different scenarios…
- Maybe the sellers throw in the washer, dryer, and refrigerator for $300 more
- Maybe they’ll pay some or all the closing costs
There are many ways to negotiate, and your agent can help you choose the best outcomes for you.
Buying a home does not need to be a stressful experience. It should be a time of celebration and new beginnings. Use these tips to make the process easier on yourself so you can focus on your next big step in life.