With historically low rates and sellers more motivated than ever, you’re sure to find the home of your dreams in today’s booming housing market. But buying a home is a major expense, and if you are a first-time buyer, the entire experience can be a little intimidating. It’s best to take a deep breath and take it one step at a time. During the loan process, you’ll be dealing with many people who will require information or paperwork from you, such as realtors, mortgage lenders, inspectors, appraisers and more. So, not having a clear idea of what to do and how to get there can often put you at a disadvantage during the homebuying process.
Check out these 9 essential tips to help you buy a home with confidence:
- Request Your Free Credit Report. Addressing your credit health is a critical step in the homebuying process. The good news is that If your credit is poor, you can take steps today to improve it by paying down some of your debt. The higher your credit score, the better your interest rate and the more home you’ll qualify for. Visit annualcreditreport.com to request your free report.
- Set a Realistic Budget. Things happen as we go along in life that can affect our income—people lose jobs, have children, and develop health issues. So, it’s unwise to fall in love with a home that you’ll struggle to afford from the start. Your monthly mortgage payment should not exceed 28% of your gross monthly income as a rule of thumb.
- Get Preapproved. Before you make an offer, obtain a preapproval letter from a lender to show a Seller you are serious about buying their home. A preapproval goes a long way in giving you an edge in today’s competitive home market. An experienced account executive from NP, Inc. can easily walk you through the steps required to obtain a preapproval.
- Save for a Down Payment. It’s important to save as much as you can for a down payment. You don’t necessarily need to put a 20% deposit down on a home but bear in mind that the more you put down, the less your payment will be each month. For a family living on a budget, this factor could be a strong consideration.
- Start an Emergency Fund. Saving money for unexpected repairs and upgrades is a smart strategy. Unlike renting, as a new homeowner, you’ll be responsible for repairs such as roof leaks, air conditioner and appliance repairs and lawn maintenance, to name a few. You may also want to make improvements to the home, which could help increase its value.
- Check Out First-Time Homebuyer Loans. First-time homebuyer loan programs help lower the cost of owning a home. And some programs may require little or no money down and may even cover part of your closing costs. This can mean significant savings because closing costs can run you anywhere from $6,000 to $20,000, depending on several factors that your lender will go over with you before you close.
- Check Out the Neighborhood. Make sure the neighborhood you choose matches your expectations. If you prefer a family-friendly community, take note if there are kids around, shady parks to play in, and schools that meet your expectations and your child’s needs.
- Work With a Licensed Realtor®. While you may be tempted to sell your home on your own to save money, it is not advised. You can find a licensed real estate agent through your local chamber of commerce or a family/friend referral. A Realtor® can help you secure the best price for your home, check out neighborhoods and community amenities, schedule inspections and draw up all the necessary contracts.
- Get a Home Inspection. It’s never wise to skip the home inspection. A licensed inspector can detect something wrong with the home that you can’t see on the surface. You don’t want to find out later that your home needs a major repair when it’s too late to back out of the sale. In some cases, you can use minor repairs to your advantage as a bargaining chip to lower the home’s price.
Trust an Experienced Community Lender
NP, Inc. has been a trusted community lender for over 25 years. We have helped thousands of first-time homebuyers secure financing for their dream homes. Our many loan programs are designed to suit your individual financial needs. Contact us at usmtg.com to discuss your options and find the perfect loan to fit your budget and lifestyle. We’ll be with you every step of the way, from helping you fill out the loan application to picking up your keys at closing!
By Susan Sherman for NP, Inc.