For the inexperienced, buying a house can be a very complicated and time-consuming process. Decisions that you take, along with other factors, can influence your home buying experience. Here are 8 tips for first-time homebuyers to help make the process easier
Decide on a budgetBuying a home can be very expensive. So it is crucial to decide on how much you can realistically afford to spend on a house. Affordability calculators available online take into consideration your annual salary and your proposed downpayment to help you estimate what your budget should be.
Save towards a down paymentMost people take out a mortgage to help them buy a home. Lenders typically require you to make part payment towards the purchase. This amount can vary from lender to lender, but commonly, better interest rates are offered for larger down payments. Apart from better mortgage terms, a more significant down payment also lowers your mortgage amount and gives you more equity in your home.
Keep your credit score healthyA good credit score is essential when it comes to being approved for a mortgage. Buyers typically get better interest rates if they have high credit scores. Lower your debt and pay bills on time to see a rise in your credit score.
Gain your pre-approvalWhen you apply for a loan, a lender reviews your application and provides an estimated loan amount and interest rate based on your complete financial health. Being pre-approved for a certain amount gives you a better picture on whether you can afford to buy that dream home. Comparing rates from multiple lenders after you have your pre-approval may help you get better terms on your mortgage.
Focus on a good homeEmploy a great real estate agent to guide you to choose the right home for your family. Consider factors like schools, crime rates in the locality, amenities available in the neighborhood and commute times to work when looking for a home. Cheaper starter homes in better areas could be beneficial in the long-term.
Make them an offer they can’t refuseOnce you have a home shortlisted, make a firm offer. Your negotiating power varies depending on how competitive the market is. Communicate often and make your offer stand out from the rest to increase your odds of closing the deal.
Be ready for closingTypically, lenders order a home appraisal after signing a purchase agreement. If your home’s current market value is lower than the sale price, to save you extra costs, renegotiation with the seller may be in order.
Plan for hidden costsAlong with your principal and interest, taxes and insurance are also included in your monthly payments. Benefit from online calculators that can give you an idea of what your monthly payments will look like. Closing a mortgage also attracts fees that include lender fees, title insurance, and appraisal costs. Keep some savings aside for these. Researching all the aspects of buying a home and comparing online, could make the process hassle-free and help you close on your dream home quicker.