Buying a home is not easy for first time buyers. So, here are a few tips to make a process go smoother if you are a first-time home buyer:
1. Make a Budget First
Owning a home will drastically restructure your finances. Meaning, when you buy a home, you will have hefty additional expenses to worry about related to keeping and maintaining a home. So you must be absolutely sure before you buy a house that you can keep up with all the payments. A mortgage is not the type of loan you want to default on. Not only will you lose your house if you don’t repay your mortgage, but your entire financial future will be ruined. Therefore, make a budget for anticipated expenses before you shop for a home.
2. Think of Future Needs
When you decide on the type of property you want to buy, don’t consider only your present needs. You must consider your future needs as well. For example, if you are dead set on buying a single bedroom beach condo, think about whether it will be suitable for living five years from now on also.
3. Don’t Forego Real Estate Agents
Don’t avoid real estate agents because you have to pay them commissions. These agents are experts at finding properties that meet your needs. If not, they are really good at negotiating good deals. You will certainly run into trouble securing the home you like without a professional agent. Search here to find nearby real estate agents.
4. Mortgage Preapproval is a Must
Do not skip getting preapproved for a mortgage. It can make the actual mortgage application go much smoother. Also, prequalified home buyers can get a realistic estimate for the size of the mortgage they might expect a bank to provide. This is crucial when determining the price of the home you want to buy.
5. Save Money for the Down Payment
Down payment is a separate affair from mortgage. You will need cash at hand to pay this before you finalize the deal. Ideally, you should save in advance to get the funds you need for the down payment. You can also consider borrowing money from family or friends, or seeking down payment assistance from your bank or the local government. You can go through the various grant programs that government and private agencies provide to first time home buyers.
6. Get a Secured Loan for the Closing Costs
Closing costs are another expense of buying a house that won’t be covered by the mortgage. In case you are short of cash, you can consider getting a secured loan for the closing costs, and also for the down payment if necessary. You will have to provide collateral in the form on jewelry, stocks, a car, or any other valuable assets you may own. This is a much safer and less expensive method than getting the funds using an unsecured personal loan.
7. Know the Area
Before you make up your mind regarding a property, it’s paramount that you know the neighborhood. The location plays a crucial role in deciding the value of a house in the long run. For example, a house in the city will be more valuable than a house in a rural area. Also, the neighborhood where the home is located matters greatly. Therefore, get information regarding the location from several sources, including your real estate agent.
8. Don’t Judge a House by its Looks
Good looks aren’t everything to a house. As mentioned before, things like location also matter. So, don’t buy a house just because it looks nice. You can always make alterations to a part of a property if you don’t like it, as long as the price is reasonable and the location is good. Therefore, make aesthetic appeal secondary to structural factors, such as the number of bedrooms, when buying a house.
9. Research the Price
Don’t agree to the first price the current owners offer. Compare the price offered to the value of similar properties in the area. You can look at the property tax filing for the house to get a good idea of how valuable it truly is. If the current owners have reduced the selling price in the last 6 months, you will have a better chance of negotiating for a lower price.
10. Inspect, Inspect, Inspect
Don’t buy a house without conducting a thorough inspection. Check the pipes, the ceiling, electrical wiring, the heating, and so on before you finalize the deal. Make sure everything is as described; otherwise you will be in a lot of trouble later.
If you buy a house following the above tips, you can’t go wrong. Be informed before you make the final decision.