Buying a home is one of the most significant and most critical decisions you’ll ever make in life. It can be challenging and frustrating, especially for first-time buyers. It comes with plenty of steps, requirements, and tasks, plus one tends to be anxious about the massive expense on one thing.
Fortunately, first-timers may have advantages offered by the real estate industry for encouraging their entrance into the market. Be advised on the guidelines to follow and avoid falling into the trap of making an impulsive purchase that can ruin your financial goals, or keep you paying a mortgage for an entire lifetime.
This article alerts you on what you should know when buying a house for the first time. Keep reading.
Closing costs saving
When buying a home, you not only need a down payment but also closing costs. For a first-timer, you’re probably wondering about the expenses required to close on a house. Well, the charge is averagely three to four percent of the total house price. You’ll be given the exact value of the amount needed by your lender for knowing the much you’ll provide on the closing date. The charges cover aspects such as appraisal, credit report, homeowner’s insurance, home inspection, and attorney. Saving for the down payment and closing costs is paramount and should be done as quickly as possible. Move into a less expensive apartment like HBD housing mentioned in Loan Advisor, sell properties you don’t use, find a second job, and so on.
Repay every debt and have an emergency account
The truth of the matter is, it’s costly owning a home as compared to renting. Think about the responsibilities done by your landlord. Do you think it’s easy? What they do is the same thing you’ll have to apply- for instance, maintenance costs, and house upkeep, among others. That’s why it’s crucial buying a house for the first time after clearing all debts and having an emergency fund covering around five months of expenses you might encounter. Consequently, you can pay all the unforeseen costs coming your way in the new home. Where will the stress and worry come from afterwards?
Stay debt-free for as long as possible. Create a budget and stick to it. There could be temptations and excitement about furniture decoration and new house shopping. You may just focus on mortgage alone and, of course, your welfare and other developments. Be mindful of your spending. Without enough to do everything, spend on one thing at a time. Decorate one room after the other. Don’t rush.
Compare loans from several lenders
Comparing loan offers from different lenders is imperative for weighing the rates to find the most affordable deal. Don’t just stick to the one who approved your loan. Similarly, to closing costs and other expenses, loan offers also vary from one lender to another. Most mortgage lenders give a three-day loan estimation to the borrower. Use this estimated loan for negotiating for even lower charges.
Get a loan pre approval
After saving for the closing costs and down payment, you can now consult a lender and discuss the mortgage deal. Ensure getting a pre-qualified loan and wait for a preapproval letter before beginning to house hunt. The lender will confirm some documents, including proof of income and taxes, to clarify your financial details. Getting a preapproval is a good indicator to a seller that you’re a serious home buyer- gives an upper hand in the competitive market, more so, for a first-timer.
How’s the neighborhood?
Once you’ve gotten homes within your price range, consider other factors in the neighborhood. How are the social amenities in the area? Are the roads accessible? How long does it take you to reach the nearest hospital or school? All these are fundamental questions that need clear answers before choosing. Don’t make decisions basing on the house property alone. Consider the home location and neighborhood quality.
Reach out to the pre-existing residents and inquire more about the area’s crime rates and social behaviors. Also, ask about the schools and hospitals, markets, among others. Are they of standard? Will you manage to commute? Make several visits to the area and gauge the traffic plus noise levels. Remember to pick a place that will make you grow rather than drain you.
Make an offer within your means
Assuming you already found an affordable home of your choice with ready loan pre-approval, you can now make an offer. Being a first-timer, it may be difficult knowing what to offer. Don’t stress out. Consult your real estate manager for help. Tell them to help ensure the offer is competitive in the market and not beyond your budget.
The agent will present your offer to the seller’s agent, who responds by giving a counteroffer or acceptance. After that, you can keep sending more offers until you reach an agreement or quit for another house.
Inspect the home before buying
The home you plan to purchase may appear seamless, but it’s recommended that you find a professional to inspect. Let them check for the quality, safety, and security plus the overall condition. No one wants to get into a new house with immediate and unexpected repairs. In case the home has defects, the owner failed to disclose, you may ask for your offer’s cancellation. Alternatively, ask the owner to do the repair work or reduce the price.
The Bottom Line
As a first-time home buyer, you may be excited about the whole process. It comes with many tasks and a bit of stressor requiring you to get prior information before getting started. For instance, you should save and clear all debts, check the neighborhood to ensure there’s convenience in terms of social amenities such as schools, roads, and hospitals, make a competitive offer staying within your budget, among others. Saving is very crucial before buying a house. You can also consult a real estate agent for guidelines on house buying and offers. Make use of this article in making the most incredible decision of home buying as a first-timer.