The acquisition of a home is a considerably high-stakes endeavor, particularly for first-time property buyers. A recent report issued by the National Association of Realtors shows that people under 36 years make up the largest fraction of homebuyers across the United States. Of this fraction, 66% of these buyers acquired a home for the first time.
Are you a first-time homebuyer? Before you start checking property listings near you and excellent homes for sale, here are essential things you should know.
- Clear your debts
Buying a home isn’t an easy process. The chances are that you part with a massive chunk of money and so you do not want to have other debts when. Making sure you pay all your debts and saving for emergencies will go a long way to ensure you have a smooth home purchase experience. The last thing you want is racking debt and then add mortgage.
- Determine the amount of money you can spend to buy a home
Before you get your emotions high, decide on how much you would like to spend buying a home. Your budget should factor in all aspects of a property-purchase process. Determine the amount of money that you spend every month and where that cash goes. This calculation will show you the amount of money you can allocate to mortgage payments.
Remember, you will need to pay bills such as utilities, car maintenance, food, clothing, student debt, retirement fund, and more, even after acquiring a property.
- Save enough money for a down payment
Most people save at least 20% for the property’s down payment. However, some lenders can reduce the amount needed for the down payment. This means you can make a down payment of less than 20% of the property’s price. It’s recommended to work with an experienced realtor to ensure that you get the best down payment deal without having to pay more than you should, particularly when paying the remaining amount.
- Compare mortgage
Mortgage rates vary from one financial institution to another. Most first-time house buyers do not bother to compare mortgage rates offered by company A, with those offered by company B and company C. The Consumer Financial Protection Bureau states that you can save at least $4,000 by comparing rates. Compare both fees and rates of at least three companies before you make a decision.
- Mortgage pre-approval
The amount of mortgage your lender is willing to give you matters a lot in choosing what house to buy. Therefore, make sure you get prequalification details from your lender. It ensures you make an informed decision. Sure, you can make an estimation of the amount of mortgage you are likely to get, but your preferred lender may have a different opinion.
- Shop for a property that fits your requirements
Most of the time, homebuyers save a down payment and even get a mortgage approval before they go out to shop for a house. This is necessary to avoid financial disasters. Consider attending various open house event and check if that is how you would want your home to look like. This will help you make a reliable decision.
You can find excellent for-sale homes through listings platforms, real estate agents, and even local publications. It’s recommended to start touring different homes to develop a sense of your preferred home and the specific homes available within your preferred neighborhood. The moment you find an apartment that meets your price range and has the features that you desire, it’s time to make an offer.
- Get the home inspected
Once your preferred home enters escrow, the buyer should be contingent upon passing a professional inspection. If the seller accepts your offer, make the right arrangements for a professional property inspector to check the property. Both you and the home seller will get a copy of the home inspection report. If anything needs to be fixed before you pay for the property, negotiate with the seller.
The process of buying a home is complicated. You will need the help of a real estate agent to identify a good lender, find a property that meets your needs, and work with the lenders. Your home purchase process will be seamless if you work with a real estate expert.
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