10 handy tips for first-time home buyers

10 handy tips for first-time home buyers

Buying a home, especially if it’s your first time, is a special feeling. It can be exciting and daunting at the same time. After all, it is unlike most other things we purchase in our daily life. A home is one of the biggest investments you’ll make in your lifetime, so it’s important that you do it right, from start to finish. And for that, you must follow some expert tips for first-time home buyers.

Determine the type of home and your requirements
The first thing you should do is decide which type of home you want—a traditional single-family home, duplex, townhouse, condo, cooperative, or something else? Remember, each has its pros and cons. You might want to research each of these options to understand which one best fits your needs. Also, don’t ignore your requirements. If you want a specific sized home in a particular neighborhood and desire certain features in your home, factor in all of that to narrow down your options.

Check and improve your credit score
Like most first-time home buyers, you’ll likely purchase a home by taking out a loan, and to qualify for that, you need a good credit score. You can check your credit score by requesting free copies of your credit reports from the three main credit bureaus—Experian, Equifax, and TransUnion—and dispute any errors that negatively affect your credit score. If your score is decent, improve it by paying all your bills on time and keeping credit card balances as low as possible.

Research your mortgage options
There are multiple mortgage options available: conventional mortgages, FHA loans, USDA loans, and VA loans. The mortgage option you choose will determine how much down payment you’ll make and what kind of home you can purchase, among other things. Keep in mind that each type of mortgage has its own eligibility requirements that you must meet to secure funding.

Read up on first-time home buyer assistance programs
Many states and some cities and counties offer special programs for first-time home buyers. These programs can provide low-interest loans with down payment assistance and even closing cost assistance. However, assistance programs are usually for borrowers with an income below a certain level. You must look into these programs in your area and determine if they’re suitable for you.

Estimate your budget
After you’ve checked your credit score, thoroughly evaluated your mortgage options, and researched assistance programs, you may have a better idea about how much you can actually afford to spend on buying the home. While calculating your budget, make sure to include hidden costs of homeownership, such as maintenance costs and property taxes. To avoid financial stress down the road, avoid going over budget.

Seek pre-approval for a loan
Pre-approval refers to getting a document from your lender that specifies how much loan you can get. Having a pre-approval letter has several advantages. It shows sellers that you’re serious about purchasing their home, which puts you in the rightful position to make a stronger offer. It also gives you a much clearer idea about what you can afford. So, it is crucial to get a pre-approval before you begin shopping for a home.

Compare multiple loan offers
Probably the only way to know you’re getting the best deal, even if you only qualify for one type of loan, is to compare offers from several lenders. Every financial institution charges different fees, which can significantly impact the total cost of your home. Furthermore, mortgage interest rates—another factor that determines your home price—can also vary from one lender to another.

Hire a good real estate agent
A good real estate agent will help you find a house that best suits your needs and is within your budget. In addition, they will assist you throughout the home buying process, including negotiating on your behalf and completing paperwork. While you can do all this by yourself, working with a real estate agent, especially when you are a first-time home buyer, helps ensure that you don’t make mistakes you regret later.

Get a home inspection
Performed by trained professionals, home inspection involves a thorough assessment of the home’s structure and mechanical systems, including plumbing, roof, and other parts of the home. The reason for getting a home inspection done is that you don’t want to get stuck with a house that requires costly repairs or improvements frequently.

Negotiate
Don’t hesitate to negotiate with the seller if they don’t accept your initial offer. If you negotiate well, the seller may lower their final price. If the home inspection highlights some problems, ask the seller to lower the price to cover the cost of repairs you’ll have to make later. You can also ask the seller to contribute some money to closing costs.

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