When purchasing a home, the real estate market might appear everywhere. However, if you do your homework and prepare ahead, being a first-time homeowner may be a dream that is within reach.
The average price of a home now is $391,200, and they sell in just 17 days. So now homeowners must make a significant financial investment and learn a lot of unfamiliar information.
Here are some wise financial decisions and home-buying advice you can use right away to get you started on the road to homeownership.
Tips For First-Time Home Buyers
You can figure out what you need to know and do with our insider information. This information is insider knowledge gleaned from 20 years of lending.
Below are some of the most important tips every first-time homeowner must know.
1. Maintain A Good Credit Score
Paying your payments on time is the most crucial thing you can do to improve your score. For lenders, a person’s ability to make credit card payments on time shows that they can take out and repay a loan. Also, open only a few new credit lines at a time.
The quantity of credit inquiries—such as requests for new financial products or credit limit increases—is taken into account by VantageScore and FICO. Before applying for a mortgage, you should refrain from opening new credit lines for at least a few months.
Generally speaking, experts advise keeping your total utilization below 30%, with 10% being even better.
Monitoring your credit reports for any errors is always a good idea. For example, in a study, 26% of participants discovered at least one error that might give lenders the impression that they are more risky borrowers.
Mistakes frequently happen when someone applies for credit cards using multiple names or when an ex-spouse’s information is still on your report.
2. Start Saving
An all-cash offer is the ideal down payment for a first-time home buyer, but if that isn’t feasible, strive for a 20% down payment. If money is a concern, look into low-down payment loans like FHA and VA loans.
Decide on a goal using a down payment calculator, and then start saving by setting up automatic payments from your bank account. You’ll need to save for a few things to purchase a house.
Some of the most significant expenditures are the down payment, closing charges, relocation, and other costs. You don’t have to stop drinking lattes; the price of a cup of coffee won’t be enough to buy a house.
However, making an effort to reduce other costs might speed up your house-saving process. For example, keep your money in a high-yield savings account when saving for a home since the stock market is too unpredictable for short-term investments.
Get the most benefit from your savings by securing the highest interest rates. Before having a chance to spend them, transfer tax refunds, bonuses, raises, and other financial windfalls to savings.
3. Decide Your Location And Needs
We’ve included some of the most important ones for you to consider because there are numerous things to consider when choosing where you should reside.
The cost of living plays a significant role in figuring out how much house you can afford and where you want to reside. Check to see if it’s a seller’s or a buyer’s market since this might influence your ability to negotiate when purchasing a home.
You must choose the type of area you want to reside in before searching for a new site to launch your business.
A large city may have more options for housing, dining, and entertainment, but it may also cost more. On the other hand, a tiny town could have large open areas and lower living expenses.
You may also want to read this article: Top 10 Reasons Why People Sell Their Homes
4. Decide On A Budget
It is possible to create a household budget. However, each buyer’s definition of “affordable” will be different. First-time buyers frequently base their decisions on how much a lender would advance them.
This might put them in a difficult financial situation and possibly lead to foreclosure. First-time purchasers should think about the property’s size and condition. You will pay less interest throughout the loan’s term the more significant the down payment you make on a property.
Aim for at least 10% if you cannot pay $60,000 down on a $300,000 house. A famous “rule of thumb” for determining how much money you may spend on a monthly mortgage payment is the 28% rule.
Most of your money is locked up in your home instead of readily available liquid assets when you are “house wealthy but cash poor.” A home equity loan or equity line of credit can be used to access significant amounts of home equity.
5. Evaluate All The Loan Options
Numerous lending options are available to assist first-time homebuyers with their down payment and closing fees. Grants or loans with little or no interest are frequently provided via down payment assistance programs (DPA).
Federal government-backed loans are another option for qualified purchasers to use when buying a property with no money down.
Assistance with closing costs may come from a grant or loan. In addition, you may develop your purchasing confidence by using online instructional tools and activities.
Anyone American citizen or legal resident is eligible to participate in federal programs. FHA loans, USDA loans, and VA loans are the three categories of loans that the government backs.
Non-governmental groups like charities and NGOs can provide financial and educational resources. In addition, assistance with closing costs may make it easier to pay for these costs.
6. Do A Thorough Property Survey
There are several reasons to conduct surveys. First, when developing new parcels, they are utilized to set borders. Additionally, they may recognize and validate existing defined land borders.
If the current survey needs to be updated, you can use it rather than ordering a new one.
One of the finest methods to identify businesses to complete the work is through web searches. However, working with the prior surveyor on the property may be more cost-effective.
Get Your New Home Right Away!
Make sure you are debt-free and have an emergency reserve of three to six months’ worth of living expenses before buying your first property. You’ll be in a great position to look for your new house once you’ve completed the preparations above.
With these tips for first-time home buyers, you’ll be well-equipped to make a decisive move. Additionally, you’ll be familiar with your local market and have the necessary resources (like preapproval).
If you’d like a professional help knowing how you can start buying your dream home, reach out to us. We buy houses in Jacksonville FL and nearby cities. You don’t need to feel lost about all this stressful stuff, just let us handle the process. Get your no obligation FREE cash offer today!
Frequently Asked Questions
The amount of money needed for a down payment on a house can vary depending on the type of loan you are getting, your credit score and other factors. Typically, for a conventional loan, you’ll need at least a 5-20% down payment, but for an FHA loan, the minimum down payment is 3.5%.
Closing costs are the expenses, over and above the price of the property, that buyers and sellers normally incur to finalize a real estate transaction. They can include things like appraisal fees, title search fees, attorney fees, and other miscellaneous expenses. On average, closing costs can range between 2-5% of the purchase price of the home.
One way is to ask friends, family, or colleagues for recommendations. You can also search for agents online or through local real estate associations, and look for agents who have experience working with first-time home buyers. It’s also important to interview several agents to find one that you feel comfortable working with, and who is responsive and available to answer your questions.
The first steps in the home buying process include determining your budget, getting pre-approved for a mortgage, and shopping for a home. Once you’ve found a home you’re interested in, you’ll need to make an offer and go through the process of getting a home inspection and appraisal. You’ll also need to work with your real estate agent and mortgage lender to finalize the purchase and close the sale.
To get a mortgage pre-approval, you’ll need to provide some basic information to a lender, such as your income, employment history, and credit score. The lender will then conduct a preliminary review of your financial information and credit history, and provide you with an estimate of the mortgage amount for which you would be approved.
As a first-time home buyer, it’s a good idea to get a general home inspection, as well as any other inspections that may be necessary, such as a pest inspection, radon inspection, or mold inspection. A general home inspection will check the condition of the home’s major systems, such as the roof, foundation, electrical, and plumbing systems.