Buying a home is a big deal. If you’re thinking about taking the plunge, these tips for first-time home buyers may come in handy.
Tips for First-Time Home Buyers
The prospect of becoming a homeowner is both exciting and intimidating. While you might be tempted to start your search for the perfect home by sifting through the listings on real estate sites or touring open houses, there are actually other things that you’ll want to accomplish first. If you don’t know what they are, these tips for first-time home buyers will help you figure it out so that you can make wise use of your time as you start your journey toward homeownership.
Start Saving Early
A home is a major purchase, so it’s no surprise that it’s easier to achieve your housing goals if you have some cash on hand. If you know that you hope to be a homeowner someday, start saving for your objective early. As NerdWallet reports, aspiring home buyers should be prepared for these major costs:
- Down Payment: How much of a down payment will you need? That will depend on your lender, your financial situation, and the type of home loan that you choose. For example, some conventional loans allow borrowers to make down payments as low as three percent. With a loan like that, you’d need a down payment of $7,500 to purchase a $250,000 home.
- Closing Costs: The fees that you’ll pay for the services that your lender and other professionals provide during the sale of your new home, closing costs typically add up to between two and five percent of the total loan amount. You may be able to negotiate the price of some of these costs. In addition, the seller may agree to pay some of them.
Check Your Credit
Your credit score takes information regarding how you’ve handled money in the past and uses it to predict how likely you are to repay your future financial obligations. A strong credit score can help you get approved for the home loan that you need to buy the home of your dreams, and a higher score means that you’ll be offered a better interest rate and better loan terms. As The Ascent indicates, you’ll want to be sure to check that your credit is in tip-top shape before approaching any lenders. To do that, request copies of your credit report from the major credit bureaus, and check them carefully. If you notice any errors, ask that they be corrected.
Learn About Loans
As U.S. News & World Report notes, there’s a lot of variety when it comes to home loans. Should you opt for a fixed-rate or adjustable-rate loan? Would a 15-year or a 30-year loan term be better for your needs? What are the pros and cons of conventional loans, FHA loans, VA loans, and USDA loans? As a first-time home buyer, it’s natural to have lots of questions. Spend some time looking for answers. Consider taking a first-time home buyer course. Read up on the various types of loans. While you don’t need to be an expert, learning enough to ask the right questions can help you feel more confident about your decisions.
Get Preapproved Before Going Shopping
Visit a lender and get preapproved for a home loan before you get serious about shopping for a home. As Better explains, getting preapproved means that you’ll know how much you’ll be able to borrow. If you’re depending on a loan to fund your purchase, knowing the size of your loan means knowing how much you actually have available to spend on a house. As an added bonus, having a preapproval letter also makes real estate agents and sellers take you more seriously.
Think Beyond the Purchase Price
As you’re considering your budget as a future homeowner, it’s important to not get totally caught up in the purchase price. As Forbes points out, your mortgage payment won’t be your only expense. You’ll also need to have funds for things like maintenance and repair costs, property taxes, and homeowners insurance. Plus, you’ll still have your normal living expenses.
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Are you ready to buy your first home? If you have questions about home loans, PrimeLending Dallas is here to help. Reach out to us today.