You’ve reached that stage in your life when you are ready to take a plunge and purchase your first home. Well, congratulations! It certainly takes a lot of courage to take this huge step because let’s face it, this is one of the biggest investments you’ll ever going to have.
Now, according to the latest reports, the house prices continue to climb, but it doesn’t mean that you should be discouraged by this fact and give up on your plan. The only thing you should do is take some factors into account.
And act smart, of course. That’s exactly why we’ve decided to compile a couple of house-buying tips that are going to help you be successful on this journey. So, let’s take a look at them now!
Superb Tips For The First-Time Home Shoppers
Have You Checked Your Credit Recently?
If you haven’t checked your credit reports and scores recently, now would be a great time to do it. This information will tell you exactly where you’re currently standing. So what should you be focusing on?
Search for any mistakes or past-due accounts that may have ended up in collections. Namely, exactly these liabilities can develop numerous obstacles when you apply for a home loan. If you notice that there’s something wrong, make sure to immediately call the creditor to see if there’s a way to resolve this issue.
Additionally, you can utilize Bankrate to keep an eye on your credit, free of charge. Furthermore, you can also obtain a copy of your credit report (also free of charge) if you visit the website AnnualCreditReport.com.
Now, don’t forget that there are banks out there that provide consumers with various useful tools that can help them track and enhance their credit. Bear in mind, that the better your credit score, the better the interest rate on the mortgage.
If you think that there’s always some room for improvement, when it comes to your credit score, well, now is the perfect time to deal with it. It would be perfect if your credit utilization ratio is thirty percent or less.
Set Some Money Aside For A Down Payment
The Federal Housing Administration (FHA) has stated multiple times that one of its biggest priorities is to help home buyers acquire their first house without experiencing any major bumps on the road.
Now, if you are perceived as a first-time homebuyer, you will get access to state programs, FHA loans, and tax breaks. So how will you know if you can be defined as a first-time homebuyer? You must meet the criteria that we’re about to mention below:
- A person who has never had any ownership in a principal residence. This involves the three-year period ending on the date when the property was bought. This involves a spouse as well.
- A person can be defined as a displaced homemaker who has only owned something with his or her spouse.
- A single parent who has only owned while they were married
- An individual who has owned a house that wasn’t in compliance with the model, state, or local building codes.
Now, if you’ve concluded that you can be called a first-time home purchaser then keep in mind, that you can benefit from numerous assistance programs, such as down payment assistance grants and loans.
What Are Other Things That Must Be Taken Into Account?
Don’t Forget To Do Some House Search In Your Area
It’s always a good idea to do some house search in the place you live in, just so you can get yourself familiar with the current house prices. If by any chance you are interested in purchasing a property in Chicago, then make sure to look into new listing alerts from eXp Reality because it will provide you with the best offers on the market when it comes to real estate. Namely, this type of information will help you perfectly plan your budget intended for these purposes.
Recognize Your Needs
Yes, everybody wants to live in a dream house that comes with at least two stories, has a wonderful backyard, and many other things. Even though these things are pretty relevant, are they really that necessary?
Ask yourself, where do you see yourself in the future? Do you see yourself living in that house for the next ten or fifteen years? For instance, (this refers to those who currently do not have kids), are you planning to have children in the next couple of years?
If the answer is yes, then you will have to buy a house that is going to have a separate bedroom for each of them and in that case, you will also have to consider obtaining a property that is close to the school district.
Besides these things, there are so many other factors that must be taken into account right now, because you won’t be buying the house every single day. It’s not that difficult. Just take some time to think about your current needs, and the ones you’ll be having in the future.
Only when you figure that out, you’ll be able to properly define what you’re truly looking for in your future home. That’s exactly why this step is more than essential.
Opt For Multiple Lenders
We hope that by now, you have figured out what is the most suitable monthly payment for you, what locations you can afford, and the amount of cash you can put down. The next step is to shop for a mortgage.
So what are you supposed to do? Start by comparing different mortgage rates from numerous lenders, along with different types of mortgages so you can decide if this is the right time to lock in your rate.
It also wouldn’t hurt to analyze the experience you’ve had with each lender. Pick those who are generally very responsive and have great communication skills. Besides prioritizing the rates, you are quoting, you should also focus on the terms of the mortgage.
Are you fine with the late fees? Are there any prepayment penalties? If you manage to obtain a mortgage with a bank where you already have an account, does it mean that you’ll be getting a better deal, or not?
At times, it is recommendable to opt for a loan that has a higher rate if the other terms are generally acceptable for you.
Let’s Not Forget To Discuss Closing Expenses
Besides these things that were mentioned above, there is another one that mustn’t be overlooked. We’re referring to the closing costs before you take control of your house. What do they represent?
Namely, they can be defined as costs that go directly to your lender in exchange for organizing particular loan services. What are the most common costs? Below we will enumerate a couple of them:
- Lawyer fees
- Pest inspection fees
- Escrow fees
- Appraisal fees
- Discount points
- Title insurance costs
If you want to find out the precise amount of your closing costs, you can do that by checking out a Closing Disclosure. Normally, you can expect to pay from two to five percent of your total loan expenses in closing costs.
Now, since you’re a time buyer, you may first potentially qualify for government-backed loans or grants that can help you out with these costs. Sometimes, people have a tendency to ask their seller to help them cover closing costs.
Since that’s not anything unusual, feel free to try out that option as well. Generally speaking, seller concessions typically cover certain fees, such as attorney fees or appraisal.
Find A Good Real Estate Agent
Having an experienced real estate agent by your side during this process is definitely of huge importance. You should consider someone who is skilled enough and who is familiar with the area you are looking to purchase a property.
Namely, that person can provide you with useful advice regarding the current market conditions and whether the houses you wish to make offers on are properly priced. Additionally, a reliable real estate agent can also easily figure out if there are any problems with the property you’re interested in, or if there are some issues with the neighborhood as well.
Generally speaking, it will cost you literally nothing to contact a realtor, yet, you’ll be able to save lots of time during the house hunting. If you do not know anyone who is reputable and trustworthy enough, you can always ask your family members or friends for referrals.
Remember, this is a huge and serious step, hence, you shouldn’t be picking just about anyone. Make sure you are choosing someone who has a plethora of experience, especially with the area you’re interested in.
With brand-new listings and an excellent real estate agent, you will be able to efficiently figure out which property perfectly matches your needs and whether it is worth your time and money.
No matter how excited you currently are when it comes to this whole process, it’s safe to say that purchasing a home is not an easy process. Therefore, make sure to follow all these tips that were mentioned here so you can get the house you’ve always wanted.