Buying a home can be exciting yet daunting, especially as a first-time home buyer. It’s a purchase with ramifications for years, and sometimes decades. That said, there are things you should consider before you enter the housing market. Here what to keep in mind to avoid getting burned:
In order to buy a home you first need to have money, so our first tip is an obvious one: saving money. A recent post from Atlantic Bay explains:
Start saving money
One of the biggest factors that keeps people from buying a home is lack of a down payment. Conventional loans require a down payment of 20% to avoid PMI, but there are many loan options available that offer low and no down payment options for borrowers who qualify. FHA loans, for example, require a 3.5% down payment. So, for example, you’d only have to put down $7,000 on a $200,000 home with an FHA loan, as opposed to the $40,000 down you’d need for a conventional loan. A VA loan offers active and retired military members favorable loan terms with 0% down. Talk with your lender about your loan options so you know how much of a down payment you’ll need to make. Most likely, you’ll also need funds for closing costs, but we’ll talk about that later. Via atlanticbay.com
Lack of a down payment is a chief reason why most people can’t buy a new home. No matter which bank you use, being able to afford to pay a large deposit will do a lot to get you a mortgage and thus your home.
First-time home buyers would also do well to make use of a buyer’s agent:
Hire the right buyers agent
Buying a home can be nerve wracking, especially if you’re a first-time home buyer. Not only is it probably the biggest purchase of your life, but the process is complicated and fraught with unfamiliar lingo and surprise expenses.
You’ll be working closely with your real estate agent, so it’s essential that you find someone you get along with well. The right buyers agent should be highly skilled, motivated and knowledgeable about the area.
Ideally, you would contact an agent that specializes in buying homes: although agents can help with both buying and selling, the ones that specialize will be able to help you better.
Lastly, although online home searching is the best way to start hunting, it’s not advisable to fall in love with houses that you see. A recent post from Magnify Money discusses why first-time home buyers need to be cautious:
Don’t fall in love with houses you see online
Unfortunately Roudybush has seen it happen all too many times — a first-time homebuyer finds something online that looks great, falls in love with it, and then is disappointed when seeing it in person. “It can be very different in person,” she says. “Also, when looking at houses, don’t make snide comments about the house in front of the seller or the seller’s agent — it won’t endear you, and it could make it difficult to get your offer accepted. Understand how the real estate industry works.” read more at magnifymoney.com
There are houses that look good online but not that great in person. First-time home buyers have a tendency to get attracted to houses they see online, which sets unrealistic expectations and derails a showing. As a buyer, you should use online search tools as a guide, and not the end-all-be-all.