If you’re like most, buying a home will be the biggest purchase you ever make. This can lead anyone, especially first-time home buyers, to feel a mix of excitement, anticipation, and stress about the process.
While it’s not possible to eliminate all of the stress of the process, it does make it easier when you’re prepared to dive in. Rely on a REALTOR® to guide you through the process, answer your questions, and put you at ease.
Here are some tips to help first time home buyers prepare for the process:
Research Mortgage Options
First-time home buyer loan options typically enable people with low-to-moderate incomes to purchase a home. These programs may offer lower down payment options, more favorable interest rates, and more.
Because they are often backed by government organizations, qualification requirements for these loans are a lot less strict than they are for conventional loans. Some of the most common first-time homebuyer programs include FHA loans, USDA loans, and VA loans.
Some states even offer local first-time homebuyer programs that may assist with down payments and closing costs. Be sure to do your research on various mortgage types, brokers, and programs that could be a good fit for you.
Get a Mortgage Pre-Approval Done Early
Talk to a local mortgage lender to get pre-qualified and pre-approved before you start looking for a home. This will help you determine the price range for your home purchase and make it easier to negotiate with sellers.
Getting pre-qualified means you’re getting an estimate of what you might be able to borrow based on the information you provide about your finances. This is also an opportunity to learn & ask questions about different mortgages that could be a fit for you.
To get pre-approved, you will complete a mortgage application and the lender will verify the information that you provide. Once you’re pre-approved, you’ll receive a letter that is an offer to lend you a certain amount. When you’re ready to make an offer on a home, this pre-approval letter will provide the seller with security that you will get the loan. It will also solidify you as a legitimate home buyer if you are competing with other buyers.
Budget for All Costs Involved Buying a Home & Moving
It’s important to include more than just the new home payment in your home budget. Buying a home means that you are now responsible for the costs involved in moving, repairs, cosmetic changes to the home, and the annual costs of maintaining the home.
A report by the National Association of Home Builders shows that home buyers can face three significant types of expenses during their first year of homeownership: appliances, furnishings, and repairs or alterations to the property.
According to the 1% rule, you should set aside 1% of your home’s value each year for home maintenance. For example, if your home is valued at $275,000, this works out to about $2,750 per year. These home maintenance items may include plumbing issues, roofing, HVAC maintenance, fireplace maintenance (if you have one), and more.
Find An Excellent Local Real Estate Agent
As a first-time homebuyer, it could be difficult to go through the home buying process alone. Find a REALTOR® that understands your needs and knows your local market inside out to deliver the best possible experience.
A real estate agent will benefit you in many ways, including:
- Searching for a property – Once you know the features you’re looking for in a home, a real estate agent will search for homes that meet your criteria in the areas that you do (or don’t) want to live in.
- Access to homes – After REALTOR® has narrowed down these options, they can arrange a showing of the homes that stood out to you.
- Price research – Real estate agents have access to information on homes that have sold in the past few years, so they can help you determine if a potential home is priced fairly.
- Negotiating contracts – A real estate agent can help protect your interests and make sure that contracts are not unfair to you.
- Informing you of important details – A REALTOR® will be able to guide you through various issues that can come up when buying a home. This could be anything from making sure timelines are appropriate to offering advice on specific things to look for in older homes.