You might be here because you’re a first-time home buyer. While it may be an exciting time for you, remember that taking smart steps is ideal for your case.
Today, we’ll talk about getting a mortgage, finding a real estate agent, looking for a home, and making a down payment, among other things. Read on to discover what first-time homebuyers should know to go house hunting with confidence and avoid unpleasant surprises.
Tip #1: Know Your Definition of “Affordable”
Because houses are expensive, you will almost certainly require a mortgage and a hefty down payment. What are your financial resources? To get an estimate based on your income and other factors, use an online affordability calculator.
Experts recommend that your mortgage, upkeep, and taxes do not exceed 28 percent of your gross monthly income. To calculate your mortgage payment, multiply your monthly (pre-tax) income by 0.28.
Online mortgage calculators only provide estimations. Pre-approval for a mortgage will give you a more accurate assessment. To establish whether you are eligible for a loan and how much you can borrow, the bank will look at your credit history, credit score, and a few other variables. Pre-approval for a mortgage guarantees sellers that your offer is financially sound.
An FHA loan is also available and is often regarded as a fantastic choice for first-time home buyers. Although FHA loans have fewer criteria than conventional mortgages, applicants must still have private mortgage insurance and a credit score of at least 500.
Tip #2: Work with a Realtor
Home buying isn’t like online shopping where you can read reviews and whatnot. Purchasing a home requires a deed transfer, title search, inspections, and other papers are required when purchasing a home. It is also expensive.
Before committing to this kind of transaction, speak with a qualified real estate agent about the process. Find a local agent who can help you set appropriate expectations and pricing. Remember that finding a real estate agent is easy, but finding one who suits your needs is more difficult.
Tip #3: There Is No Such Thing as Perfect
Real estate necessitates compromise. Buyers typically prioritize price, size, and location. You should practically expect to finish only two. As such, find a home where you can live, grow, and remodel.
Tip #4: Do Your Own Research
Perform your due diligence before acquiring a home or making payments, and incorporate conditions that allow you to pull out if something goes wrong. As such, the house inspection is the most typical contract contingency, and it allows you to seek repairs for deficiencies.
If the bank rejects your loan application, you can withdraw using a financing contingency. If a mortgage lender believes you may miss payments, they will decline your application. Although pre-approval lowers the likelihood of loan denial, it is not a guarantee.
Consider an appraisal contingency, which permits you to get out of the contract if the lender assigns a lesser value to the home than you do. You must pay the difference out of your own pocket, which might be difficult if your resources are tight.
Tip #5: Examine Tax Breaks
The mortgage interest deduction provides assistance to new mortgages with high-interest rates. Discount points, which essentially help to prepay interest, are also deductible. Mortgage credit certification is available in some states and municipalities, allowing first-time homebuyers to claim a mortgage interest tax credit. Inquire about this credit with your real estate agent and local government.
Being a beginner at anything could be daunting. Thankfully, with the right information and professionals on your side, you can buy your first home with ease. Keep these tips in mind for this next journey of your life!
Do you want to work with home buying experts? BuyHouseEZ is your go-to team for all things real estate. We are here for your professional guidance. Give us a call today!