As one of the biggest purchases you’ll ever make, buying a home is nerve-wracking especially if you’re a first time buyer. Here’s a few tips to make the complicated process a little less stressful.
Start saving early. The most important step is to start saving money as early as you can, even if you are not ready to physically view homes yet. The earlier you start, the less surprised you’ll be by hidden costs. Even low down payments can be hefty, and if it’s less than 20% you’ll have to deal with a private mortgage insurance charge. There are many useful apps to help you create a savings plan and down payment calculators will help you set your goal. Besides the down payment, you’ll also want extra funds for closing costs. These usually run between 2-5% of the loan amount. And don’t forget to set aside a portion for items you’ll need after moving in like furniture, appliances, and décor.
Check your credit. Take a look at your credit before you start your home search. If it’s low, look for opportunities to improve it and dispute any errors you find. Also remember to avoid opening any new lines if you’re planning to apply for a mortgage soon.
Determine how much you can afford. Use our home affordability calculator to help you determine what price range is realistic for your means. Ask your realtor and lenders about any special incentives for first time home buyers to help lower the down payment.
Get preapproved. Once you find the home you want, you can act on it right away if you already have your preapproval from your lender. It can also give you an advantage in negotiating with a seller because you will appear more serious than buyers that don’t have theirs ready.
Hire the right buyer’s agent. Choose a real estate agent that has experience in the area that you are looking. They’ll be able to help you negotiate the best price with their knowledge of past sales and recent activity of the neighborhood. It is essential that the agent be someone you trust and get along with well since you’ll be working very closely together.
Buy a home for tomorrow. It is important to find a property that meets your current requirements, but also consider what future needs you may have and make sure the home fits that criteria as well. For instance, you may not have kids now, but finding a home in a good school district will be a benefit if you have a family down the road and will also help increase your home’s value if you end up needing to sell. Also remember that no home will fit every item on your wish list, so be prepared to compromise.
*This information is adapted from an article on NerdWallet.com