Tips For First Time Homebuyers
- Posted on March 6, 2023
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If you are a first time home buyer, then it is important to ensure you start planning early on and make the right decisions down the line. From having your finances in order to picking the correct location, there are many factors involved in the process.
Here are a couple of tips that you can use to make your journey toward home ownership easier:
Start Saving Early
The earlier you start to save up for a home, the more money you can accumulate by the time you want to make the purchase. Even if you will use financing to buy a home, saving up for a deposit is still a good idea. There are several costs that you will also need to cover throughout the buying process, such as a down payment and closing costs, which could calculate to as much as 25% of the buying price combined.
Determine An Affordable Price Range
When calculating what you can afford, a good rule of thumb is the 28/36 rule, which states shouldn’t spend more than 28% of your gross, or pre-tax, monthly income on home-related costs and no more than 36% on total debts, including your mortgage, credit cards and other loans, like auto and student loans. Other factors that go into how much you can afford includes your income, cash reserves, debt and expenses, and credit profile.
Strengthen Your Credit
Most people decide to apply for financing when they want to buy a home. This means you need to have an excellent credit record. Some ways to boost your credit score includes:
- Continuing to make monthly debt payments on-time
- Keeping your credit utilization rate low
- Disputing any credit report errors
View Mortgage Options
There are several financial institutes that offer mortgage loans, so it is important to carefully assess your options. Make sure you speak to different financial consultants at these institutes to get a better idea about what you should expect. You’ll first receive a mortgage offer when you submit your application. Make sure to analyze the interest rate and other costs that are added to the loan amount.
Explore The Best Neighborhoods For You
You should also ensure the neighborhood where you want to buy a home is suitable for you and your family. Consider where you work, your lifestyle, and potential school districts. You’ll want to make sure that your neighborhood aligns with your interests such as a local school with a program that fits your child’s needs or living in a walkable area. You can also speak to people who live in the neighborhood to get a better idea about its safety and the overall community.
Work With A Real Estate Agent
Another important tip is to work with a real estate agent, especially if you do not have experience in the home buying market. Legal experts like Rochford Law & Real Estate Title can also help you understand the terms of mortgage contracts and ensure you are treated fairly when it comes to putting down offers on homes that you feel interested in. A real estate agent can often also help you find a home that is suitable for all of your family’s needs. This can significantly ease the process of reviewing different property options and trying to find a neighborhood that is right for you.
