Buying a home for the first time can, at first, seem like a daunting task. If you do your research and make sure you are financially ready, it can be a great investment and even a fun process. We have compiled 6 tips for first time home buyers to help you make a sound investment.
6 Tips for First Time Home Buyers:
1. Check Your Credit Score
Before you consider applying for a home loan, you need to be certain that your credit score is in the viable range for a decent mortgage rate. If you don’t know where you currently stand, check your credit score to see. It would also be wise to avoid opening any new lines of credit, (for a credit card, a new vehicle, etc.), during or directly before the home buying process.
If you need to work on raising your credit score, you can sometimes work with a credit expert through your mortgage lender to help you get your score where you need it to be. The best thing to do in many situations to raise a credit score quickly is to pay off as much debt as you can. This will lower the percentage of available credit that you utilize, which is a factor in determining your credit score. Start with credit card debt.
2. Research Your Mortgage Options
There are a lot of great mortgage options out there for first time homebuyers. The VHDA offers loans with as low as 3% down for qualifying participants, and depending on your income level, you may even be eligible to get money towards your down payment as a grant. Check out all of your options so that you know when a mortgage lender is offering you a good loan.
When you are ready to look for a mortgage lender, look for someone you can trust. Your real estate agent will likely have a connection with a dependable mortgage lender that they can recommend. You can also ask your homeowner friends for recommendations. Your mortgage lender can help walk you through all of your options. Don’t be afraid to get quotes from multiple mortgage providers, but be aware that the final closing disclosure could be different from those provided estimates.
3. Research The Process
Another tip for first time homebuyers is to make sure that you have researched the home buying process prior to starting your house search. Knowing what’s involved, from the home search and the mortgage application, to the inspection, all the way up to the closing, you need to be familiar with everything that is to come so that there are no surprises.
Understand that the home buying process is called a process for a reason. It doesn’t have to be a chore, in fact it can be quite enjoyable. But in order for you to stay positive and confident, you have to be aligned with a solid team of professionals. The process can seem daunting at first, but once you get serious in your house search, it really does tend to take on a life of its own. Lean on the expertise of your agent, and use your knowledge to anticipate the timeline, as well as other details of your purchase.
4. Know Your Market
The decision to buy a home is obviously a very large one. It has the potential to be a great investment, but it is certain to be a great financial responsibility. One of the best tips for first time home buyers is to get a good feel for the real estate market that you are shopping in. The more you know, the more informed this important decision will be.
Location is very important in real estate, but it is not so much the physical address as everything that comes with it. This means that location has the potential to change in value. Is the neighborhood that you are looking in on the rise? Is it already a great area with access to all of the things that you value? Get to know the area around any home that you are looking at and make sure you take into consideration how it should affect the current price tag, as well as the home value in the future.
5. Get An Agent That You Trust
No matter how well you think you know your real estate market, there are some things only years of experience can tell you. That’s where your real estate agent comes in. One of our tips for first time home buyers is to find a real estate agent that you feel like you can trust and have an open dialogue with. They can help you determine if a property makes sense for you financially, and they have an eye for all sorts of red flags you may encounter in the process.
A lot of times, people don’t really know exactly what they want and need in a home until they look around. It is often by seeing examples of what you don’t want that you are able to narrow down the search. Your real estate agent will help you find the home that fits your needs based on the conversations you have at the beginning of your search.
6. Be Involved In Everything
You have probably noticed a common theme among many of these tips for first time home buyers; knowledge is power in the homebuying process. When you are buying a home, you need to stay as involved as possible to make sure that you are always making informed decisions.
Read everything, and always double check your numbers. Banks, credit unions, and mortgage lenders can make mistakes, so pay close attention to the itemized details of your fees within your disclosure. If something is being paid for before closing, make sure it is not included in the total due at closing – stuff like that. Also, be prepared to provide a LOT of financial documents to your lender. The more responsive you can be here, the quicker the whole process will move.
7. Put More Money Aside Than You Think You Are Going To Need
I am sure you have thought about the down payment, but what about the closing costs, the home inspection fees, the good faith deposit? Work with your lender to get a FULL estimate of your costs out of pocket at the beginning of the process, and then buffer that number just to be safe.
First time home buyers can purchase homes with relatively low investments, but you will still have a decent financial obligation to close. The more you can put down on your home at the beginning, the less you will pay in interest over the years.
Buying a home for the first time is exciting, and it can be a wonderful investment. Our agents at RE/MAX Paradise are dedicated to helping you find the home that is right for you. Contact us today to get started on your home search!