Buying a home is one of the biggest purchases of your life, which can be somewhat overwhelming. Over the last 5 years, we have helped thousands of aspiring home buyers to buy their first homes. Here are the ultimate tips that every first-time homebuyer should know before buying a home:
Speak With A Mortgage Expert ASAP
Getting pre-approved for a home loan can be the most intimidating parting of being a first-time homebuyer. But unless you are purchasing a home cash it is important to know what your home loan options will be. A mortgage expert will walk you through what loans are available to you. They will explain to you what mortgage interest you can expect, and how much money you will need for your down payment and closing costs.
Take it from us… DO NOT WAIT. To connect to one of our mortgage experts complete our quick Buyer Power Approval™, no credit pull, questionnaire.
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Understanding First-Time Homebuyer Financing Options
Loans for first-time homebuyers typically offer favorable interest rates and terms. They are designed to make homeownership more accessible and affordable for those entering the housing market for the first time.
There are 3 financing options that every first-time homebuyer should know about. They offer the opportunity to buy with little to no money down and even offer incentives for people buying their first home.
FHA Loan
The FHA loan is a powerful financing tool for first-time homebuyers due to its low down payment requirement. The down payment can be as low as 3.5% of the purchase price. Additionally, the FHA loan program offers more flexible qualification criteria, making it easier for individuals with lower credit scores or limited credit history to obtain a mortgage and achieve their goal of homeownership.
$0 USDA Loan
The USDA loan is a powerful financing tool for first-time homebuyers due to its unique feature of offering 100% financing, meaning no down payment is required. Additionally, the USDA loan program provides affordable interest rates and relaxed credit requirements, making it an attractive option for individuals with limited financial resources or lower credit scores who are seeking to purchase a home in eligible rural areas.
First-Time Homebuyer Grants and Down Payment Assistance
The down payment assistance program and homebuyer grants are powerful financing tools for first-time homebuyers as they provide financial support to help bridge the gap between the down payment and the purchase price of a home. These programs can significantly reduce the upfront costs, making homeownership more attainable for individuals who may struggle to save a large sum of money for a down payment, ultimately opening doors to homeownership and fostering economic stability.
Know how much down payment you\’ll need
Once you speak with a mortgage expert you’ll need to have a savings account with enough money to cover closing costs and inspection fees. In most cases, you’ll need to have a down payment to get a loan; which is a certain percentage based on your loan amount. Your mortgage expert can give you a ballpark figure of all of the out-of-pocket fees you might have once they pinpoint your budget range. However, it is important to know that a lot of the inspections & closing costs will be out-of-pocket. Check out our savings tips for first-time homebuyers.
You Have a Good Credit Score
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Knowing your credit score ahead of time is important. Sites like Credit Karma offer free credit reports. You can also check your mobile bank app, which often includes a snapshot of what your current credit looks like. If you do have small credit issues speak with your mortgage expert and they can make recommendations to improve your credit. Do not try to fix your credit without professional guidance. This could be a waste of time, energy, and resources. Connect with a mortgage expert to get a copy of your credit report and create a path to improvement.
Have a Good Real Estate Agent
Your choice of agent will have a massive impact on your overall success as a first-time homebuyer. A great real estate agent will make sure you feel comfortable, take you through the steps of home buying, and encourage you to ask questions any time you have one. So you either need to know How Interview your real estate agent, check out the step by step guide. Or you can be connected with your local Savvy Homebuying expert, who we have vetted for your area.
Once you have selected an agent make sure they know exactly what you’re looking for by making a list of must-haves, negotiables, and deal breakers. This list can set the expectations for homes that you want to see.
Consider the Future
Don\’t purchase a house to solve a short-term problem. You would just be setting yourself up to have to move in a couple of years. When touring homes consider what life will look like 5-7 years from now. Is this home still a good fit when your family grows? Will you still enjoy the neighborhood when the new street gets put in? How will the commute feel after a month or two?
Is there anything about this home that would make it difficult to sell or rent in the future if you needed to do so? These are all great tips for first-time homebuyers so you don\’t purchase something that only works for you for a short period of time.
Choose the Right Neighborhood
Typically, homebuyers are interested in schools, commute, crime, and access to local amenities when choosing the right neighborhood for them. Has the neighborhood had any problems with crime? We highly recommend researching local crime maps to get a better idea of the type of incidents taking place in your favorite neighborhoods.
Is it easy to get to the highway if you have a commute for work? Ask yourself these important questions before you choose the area where you’d like to live.
Plan For Additional Costs
Here are some recurring costs you will want to factor in when you purchase a new home:
- Property Taxes
- Utility Bills
- Homeowner’s Insurance (possible flood or hurricane insurance if you are in a high-risk area)
- Mortgage Insurance
- Home Maintenance
Check Homeowner Insurance Prices
Insurance prices depend on a number of factors so it’s best to reach out to your insurance company ahead of time or speak to your agent to see if the home is in a high-risk zone. Flood and hurricane insurance is actually required in certain areas, so you may have no choice but to pay higher premiums depending on your location. A great tip for first-time home buyers is to ask your mortgage provider which insurance companies they have seen offer great rates recently. Lenders are at the forefront of these fees and can recommend different places to shop that you may not have considered.
Get A Home Inspection
We highly recommend that you get your potential new home inspected. A certified home inspector will examine the home and create a detailed report of their findings. The inspection report will provide you with detailed information on the condition of the home and give you an idea of areas that will require your attention or repair in the future. Here is a rundown of problems to look for in the report before buying the home. Often you can negotiate with the seller to handle some of these items before you close on the purchase of the home.
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Buy The Home Warranty
Even though inspections will show you existing issues with a home a home warranty can protect you against significant costs in your first year of homeownership. Defense is the new offense! While a home warranty may cost $400-$600 depending on the home it can EASILY pay for itself in the event of 1 MINOR home repair.
In conclusion, buying your first home is an exciting and significant milestone. By following these top 10 tips for first-time homebuyers, you can navigate the process with confidence and make informed decisions. Remember to prioritize your budget, conduct thorough research, seek professional guidance, and stay organized throughout the journey.
With careful planning and preparation, you can find the perfect home that meets your needs and aspirations. Happy house hunting!
