Becoming a homeowner for the first time is no easy task! You’ve probably heard horror stories from friends about overpaying or missing a crucial piece of information before committing to an offer. Here are a few tips to help you prepare for buying your first (or next) home so you feel confident in the home you choose to buy!
Before You Buy
- Start Saving Early – the earlier you
start saving, the better! Many first-time homeowners assume they just need
to save for a down payment, but home buyers must also pay closing costs up
front! Closing costs include the down payment, title insurance, homeowner’s insurance,
property tax, closing or escrow fee and others depending on your lender. Plus,
the larger your down payment, the less you’ll pay in interest as you pay off
the home loan.
- Strengthen Your Credit Score – if you
know you’re going to purchase a house in the next few years, it’s a good idea
to take action to earn a higher credit score. Start by making sure your bills
are paid on time, pay off debt you have and keep credit card balances
low.
- Learn About Mortgage Options – there
are several different mortgage options
to look into before you commit to a home loan. These include
conventional loans, Federal Housing Administration (FHA) loans, U.S. Department
of Agriculture (USDA) loans and loans from the Department of Federal
Affairs.
- Find First-Time Home Buyer Programs –
many states will assist with your down payment! Check with us to see what
programs we recommend.
- Decide How Much You Can Afford – it’s a good idea to set your budget before you start shopping or get pre-approved for a home loan. Check out this tool from NerdWallet to see how much house you can afford.
While You Look for the Perfect Home
- Get Pre-Approved – ask your lender to
draft a pre-approval letter to send to a potential seller when you’re
ready. If it’s all sorted out beforehand, you can put an offer in on your dream
house quickly.
- Don’t Look at Houses Over Your Budget
– this is a great rule of thumb for sticking to any budget, don’t look at what
you can’t afford! You don’t want to fall in love with something that’s not
realistic for your income level and prior financial commitments.
- Create a Priority List – decide what home features are important to you. This will help you weigh the pros and cons of each house. For example, if an office space is more important to you than having a large backyard, you’ll be able to narrow down your search easier.
When You’re Ready to Make an Offer
- Pay for an Inspection – not only do
inspections help you negotiate the price of a home down, but they also help you
know what you’re paying for.
- Negotiate with the Seller – don’t be
afraid to negotiate! In most instances, the worst-case scenario is
that the seller will come back with a counteroffer.
- Buy the Right Home Insurance – home insurance covers the cost to repair or replace your home and belongings if they’re damaged by an incident covered in the policy. It also provides liability insurance if you’re held responsible for an injury or accident. Buy enough home insurance to cover the cost of rebuilding the home if it’s destroyed.
If you’re in the market to buy a home, reach out to us! We’re here to help you find the right home loan for your budget.
Peoples Bank & Trust Co.
Member FDIC
Equal Housing Lender
NMLS# 407724