Here are 10 essential home buying tips first time home buyers must know to make informed decisions and avoid common pitfalls.
Are you tired of paying rent each month and making your landlord rich? If you are ready to make a change and take the American Dream that you deserve, these 10 home buying tips will give you an insight on how to become a homeowner.
Home Buying Tips #1 : Know Your Budget
Before you start house hunting, determine how much you can afford. This is one of the most important home buying tips I can't stress enough. Factor in your down payment, monthly mortgage payments, property taxes, insurance and maintenance costs. The best way to figure out the numbers is by using a mortgage calculator. There are many resourceful tools from your bank or just simply google "mortgage calculator" to help you! Here are a few of my favorite tools I like to use with my clients:
2: Get Pre Approved
Getting pre-approved from a bank gives you a clear understanding of how much a lender will lend you. These home buying tips will also show sellers that you're a serious buyer and help speed up the buying process. Be prepared to provide documents like tax returns, pay stubs, and credit reports. Feel free to reach out to me if you need any assistance with the approval process! I have many resources throughout the country to get your purchase started!
3: Understand the Cost of Homeownership
Most first time home buyers focus on the mortgage payment. This is a common mistake and I want to make sure you are aware of all the costs so there won't be any surprises! One thing to consider is closing costs. What are closing costs? These are costs that come up with your lender when signing the last bit of paperwork before you can collect keys. Be sure to account for between 2-5% of the home price. This includes home insurance, property taxes, appraisals, inspections and any lending fees. Adding to the home buying tips, here is a quick guide on what kind of questions you should ask your lender!
4: Check Your Credit Score!
Your credit score will play a big role in what kind of interest rate you will get. Aim for a 620 or higher for conventional loans although the best rates go to those who have a 740 or better. You can easily check your credit score with resources like Experian App. Or you can go to annualcreditreport.com to obtain a free report.
5: What's in the Neighborhood?
Location, location, location! Where you live matters. Research the neighborhood's safety, schools, public transportation, amenities, and future growth. A home in a desirable area can appreciate more and more over time. Some of my favorite research tools I use to help my clients are essential in the home buying process. Click on the links to learn more.
6: Don't Forget the Inspection!
One of the best home buying tips to consider is a professional home inspection! An inspection will help uncover hidden issues that might not have been visible during your initial walk-through. It is an investment that could save you thousands of dollars in repairs down the road.
7: Know Your Loan Options
First-time home buyers often qualify for special loan programs such as FHA, VA or USDA loans. These loans may offer lower down payments or better interest rates. It is important to ask your lender what special programs you may qualify for as a first-time home buyer. I have added a PDF of home buying tips to help you understand some of the lending vocabulary.
8: Closing Costs
Understand the role of closing costs in your purchase! Closing costs usually range from 2-5% of the home price. Be prepared to pay for closing costs out of pocket and account for these costs when calculating your budget.
9: Don't Overlook Resale Value
Even if you plan on living in your home long-term, think about it's resell potential. A home with desirable features like school districts, ample storage, or a modern kitchen will likely be easier to sell in the future. If you are a home owner and are curious about the value of your home, message me! I can send you a Value Report tailored to your current home.
10: Be Prepared for Negotiations
The price isn't always fixed! You can always negotiate on the home price, and closing costs, or even ask the seller to make repairs. Make sure you have yourself a great agent on your side to get you the best deal. If you need help connecting with an agent in your area, message me! I have great connections throughout the country and internationally.
