10 MUST KNOW Tips For First-Time Home Buyers

Posted by on Thursday, January 4th, 2018 at 3:53pm.

Buying a home can be stressful, especially if you’re a first-time home buyer. If you’ve been considering buying a home, now is a great time! To help you get ready for this big life decision, we’ve gathered some of the most important tips you should know before you buy:

1. Start saving for a down payment early

There are plenty of mortgage programs that offer as little as 3% down on a new home—but by putting less than 20 percent down, you’ll be losing a lot of money in the long run. If you borrow more than 80 percent of the value of your home, you normally have to pay for private mortgage insurance (PMI) to protect the lender. That PMI typically costs between .5-1 percent of the loan amount, which may not sound like much, but if if your loan balance is around $140,000, you could be paying as much as $1,400 for PMI just this year. That adds up! Save to put down that 20 percent, but if it isn’t quite reachable, even a small downpayment will make a big difference.

2. Check your credit

Your credit score is a key factor when a mortgage broker is looking at whether or not to give you a home loan. It will determine other things, too, including your interest rate and maybe even the terms of the loan. So, the first step in the process is at least knowing where your credit stands! Run a credit check and from there you’ll know if you need to dispute any errors, pay off any outstanding debts or do any other improvements to help your chances of qualifying for a loan.

3. Decide how much house you can afford

One mistake first time home buyers make is biting off more than they can chew for a mortgage payment. Go in to the house hunt process with a budget already in mind, and be sure to stick to that! You don’t want to wind up house poor with not enough left over to cover monthly expenses or unexpected problems.

4. Don’t make any big purchases or life changes

Now is not the time to look for a new job, buy a car or open a new credit card. All of these things can temporarily ding your credit and make it difficult, maybe even impossible, for you to get a loan. What a loan company is looking for is stability and credibility in that you’re making your payments on time and will be able to continue to do that in the future. If you make a big change, it takes away some of that positive history that helps prove you qualify for the loan.

5. Decide what type of property you want to buy

You might go into the home buying process thinking you’re looking for a single-family detached home. But what about your other options? Maybe a townhouse or a condo would be a better fit for you? Check out our past blog here with a breakdown of all of your options to see which is the best one for you.

6. Choose the perfect location

Don’t forget that when you buy a home, you’re buying its location as well. If you’re unfamiliar with the area, you’ll need to do your research to make sure it’s a good fit for you. How long will you have to commute to work? Are there good schools in the area? What is the street like at night? Do you feel safe there? Be sure to do your homework, and also consider just door knocking the neighbors to get a feel for the area and what living next to them will be like. Often people who live there can give you candid information that you may not get otherwise — like the house down the street that blasts music all night or if there was a series of break-ins in the neighborhood. They can also tell you what they love about the area to further solidify your decision.

7. Find a stellar Realtor

You might be amazing at searching sites like Trulia and Zillow for potential homes, but what you probably don’t know is sometimes that information is totally incorrect. So you can find a home you love at the price you need, and once you contact someone about it, you might find that it’s an old listing that has already been sold, has an incorrect price, etc. Yikes! A Realtor will have access to your entire area’s MLS (Multiple Listing Services) which will have every home for sale in the market and its current data and availability. Another advantage to looking for a Realtor before you start your house hunt is that they will also have access to homes (through word of mouth from other Realtors) that aren’t even on the market yet! Regardless, this is a process you don’t want to do alone. A Realtor can save you a lot of time, energy and money throughout your home buying journey.

8. Consider the future

Maybe the house you’re considering is just perfect for you and your spouse right now. But what about a year from now? Three years from now? If you plan on having children, will you have space for them in this home? Consider the things that will come up in your near future and make sure this home is a good fit for you, not only now, but for the next few years to come.

9. Budget for move-in expenses

So you found a home you love! But once you buy the home, do you have everything you need to go in it? Don’t forget to budget for things like movers (if you can’t bribe your friends), furnishings, area rugs, appliances, new paint, etc. These smaller expenses can really add up if you don’t plan for them in advance.

10. Always always always get a home inspection

If you’re looking for a place to cut corners in the home buying process, a home inspection isn’t it. A home inspection is going to run you a couple hundred dollars, but can save you thousands upon thousands in the future. What if you buy a home with major foundation issues? Mold? Termites? You could be financially tied to a home that is (literally) falling down around you, and it can all be avoided by hiring an inspector.