Interested in buying a home for the first time? Becoming a first-time home buyer can be quite exciting. But it can also be a downright stressful and challenging process. You should avoid making an impulse purchase in which you end up with a costly mortgage. Here are five tips for first-time home buyers as enter the market.
Come Up With a Budget & Stick to It
Maybe there's a home you're already interested in, but you're not sure if you can afford it. This can be a problem if you don't have a budget in mind. You need to find out what you can afford. What's within your price range? There are plenty of free online mortgage calculators you can use to determine your monthly payment based on that home's price. You want to come up with a monthly budget that includes maintenance costs and mortgage. If you fall in love with the home and it's more than you can afford, then it's time to find something else. A bank loan officer can also help you determine a figure that you can lend, including interest. While it doesn't reveal what you can afford, it'll give you an idea of what you'll have to pay.
Pay Off Your Debt & Start an Emergency Fund
Purchasing a home can be expensive. A mortgage payment costs more than renting an apartment. Not only are you responsible for the home itself, but you're also responsible for maintenance and upkeep. And those costs can add up pretty quickly, especially if the home is a fixer-upper. You should be debt-free and have an emergency fund in place before you even consider buying a home. Your emergency fund should last from three to six months. Once you've become debt-free, you want to stay there. When you're shopping for your new home, you still need to keep your budget in mind.
Find a Realtor Who Knows the Area & Market
The best Realtors® in your area are the ones who want to improve your buying experience. A top-selling realtor is familiar with the communities, neighborhood, and the market. One way to find a trusted realtor is through a family, friend, or neighbor.
If that doesn't help, then turn to legitimate real estate websites such as Trulia and Zillow. They will give a listing of all of the realtors in your area, including ratings. Then you can find the perfect Realtor® and one that is familiar with the area and can help you find your dream home. They will be with you until closing. You should also look for a realtor who knows of the best loan officers and real estate attorneys. They can provide helpful knowledge, such as obtaining a copy of a pre-approval letter from the lender that you'll need to prove that you're the right home buyer.
Get Preapproved for a Loan
Speaking of which, you'll have to get pre-approved for a loan. You want to save enough money for closing costs as well as the down payment. Then the rest of the money should come from a mortgage lender.
During this time, you need to focus on getting pre-approved and setting enough time to receive that pre-approval letter so you can start searching for your dream home.
A pre-approval letter shows the seller that you're serious about buying their home. This can help you stand out in a competitive market where everyone's buying. You need to provide your proof of income, taxes, and other financial information in order to get pre-approved. If you're debt-free, then you should find a lender that will give first-time homebuyers a chance.
Find Out About Closing Costs
Closing costs will vary. This includes the costs of hiring an attorney and a home appraiser. The attorney will ensure that your buyer-seller agreement is acceptable and up to standards. Meanwhile, the home appraiser will inspect the home before the closing sale. You should also be aware that the realtor's commission is typically paid by the seller, not the buyer.
Cover photo courtesy of Unsplash by Tierra Mallorca