Finding your first home is an exciting milestone, but it can feel overwhelming for first-time buyers. The key to successfully finding your first home is proper education and understanding how to navigate the process. Today we’re going to share 5 tips for first-time buyers to consider.
1- Know What’s on Your Credit Report
The first thing that you should do before pursuing a home is to take a good look at your credit report. Your credit report is one of the biggest factors that lenders look at when determining whether they will provide you with a loan.
Your credit report will also be used to evaluate things such as your payment habits, current balances, and overall financial health.
With that said, it’s important to take the time to clean up your report and check for errors. This won’t just improve your credit score but make you a more attractive candidate.
2- Set a Realistic Budget
Before looking at home listings, it’s important to set a realistic budget in terms of how much home you can afford.
Time is of the essence when it comes to home buying, and you don’t want to waste time looking at prospective homes that don’t fit a realistic budget. Not only that but the last thing you want to do is invest in a home that causes you to stretch your budget beyond your means. This will only set you on a path of stress and financial problems later on.
3- Save for Your Down Payment
If you’re preparing to buy your first home, it’s important to save for your down payment.
Depending on your financial status, it can take a while to save up the amount you need. But the sooner you start saving the better. Keep in mind that if you apply for a conventional loan and put less than 20% down, you will have private mortgage insurance that will be tacked into your regular monthly payment.
4- Understand Additional Costs of Homeownership
When buying your first home, it’s easy to focus on the principal and interest payment. But there are various other hidden costs to think about when choosing a home.
For instance, it’s important to understand what kind of HOA fees you will have if any.
Additionally, you will need to consider insurance, property taxes, utilities, and other miscellaneous costs.
5- Get Pre-approved Before Making an Offer
A pre-approval goes a long way in the housing market. Ultimately, sellers want to know that you are a serious buyer worth considering. A pre-approval is a letter from a lender stating that they are willing to lend you a specific amount of money to purchase a home. It’s also proof you can actually afford the home.
With that said, if you want to make your offer more attractive and increase your chance of getting the home you want, have a pre-approval letter already in hand.
Obtaining your first home doesn’t have to be difficult. In fact, it takes the right knowledge to navigate the market. If you’re a first-time buyer, be sure to know your credit report, establish a realistic budget, save for your down payment, understand other fees involved in your purchase, and get pre-approved.