Homeownership has long been considered a cornerstone of the American dream, and for good reason. Not only does owning a home mean stability and independence, but it can also be a great investment in your future.
Especially in the white-hot housing market of today, the homebuying process can be overwhelming. If you’re looking to buy for the first time, you might not even know where to begin. We’re here to help with some tips to help you get started on your journey to being a homeowner.
Start Saving as Soon as You Can.
There are quite a few expenses to set money aside for, some of them you might not be familiar with if it’s your first time. Among them:
- Down payment: The big one. This is the money you’ll need to put down on the purchase of your home. Requirements depend upon the type of mortgage and lender, but a down payment can range anywhere from 3% to 20% of the total cost. Have a look at what homes are going for in your area and use a mortgage calculator to set some goals.
- Closing costs: These are the fees associated with the final purchase of your home and can add up to 2% to 5% of the total loan. Sometimes the seller might be willing to pay some of these costs, although that may be less common in competitive markets. You may also want to pay for a home inspection before you close to identify any issues with the property.
- Moving costs: Don’t forget to set aside some money for immediate repairs, upgrades or furnishing needs once you’ve moved in.
Check Your Credit Score
A good credit score will help make sure you get approved for a loan. It can also secure a lower interest rate on your mortgage, potentially saving you thousands of dollars over the life of the loan.
Some steps you can take to make sure your credit score is in a good place when you’re ready to buy:
- Avoid opening any new lines of credit in the months leading up to your home purchase. This usually triggers an inquiry, which can negatively impact your score.
- Pay your bills on time, and try not to carry a credit card balance if possible.
- Keep your current credit cards open, even if you use them rarely. Having more available credit helps your score.
- Keep an eye on your credit report and dispute any errors you find that might hurt your score. You can request a free credit report from each of the three major credit bureaus once a year to find out where you stand.
Check Out First-Time Homebuyer Programs
There are a number of government programs designed to help first-time buyers. They can offer anything from down payment assistance to low interest rates. Some popular federal programs include FHA loans, VA loans, and USDA loans. There are also a number of state and local programs that can offer assistance. A real estate agent or your local housing authority can help you learn which of these programs you might qualify for.
Get Pre-approved
When you’re ready to start seriously shopping for a home, it’s a good idea to get pre-approved for a mortgage. This means asking a lender to look at your financial situation and determine how much they’re willing to loan you and under what terms. Having a pre-approval in hand makes you a more attractive buyer and can give you an edge in a bidding war.
Don’t Let a Hot Market Drive You Crazy
Speaking of a bidding war, it’s not uncommon for there to be multiple buyers interested in the same property these days. If you find yourself in competition with another buyer for the same home, don’t get caught up in the frenzy and overspend just to try and beat them. Think long term and stick to your budget to avoid paying more for a home than you believe it’s worth.
Get a Great Real Estate Agent.
Luckily, you’re on this site – so this step is already partially complete!
Your real estate agent will be your biggest asset in the homebuying process. They can help guide you through the whole thing, from finding the kind of property you’re looking for, scheduling tours, negotiating a fair price, and navigating the often complicated paperwork. Generally speaking, you’ll want to look for an agent with experience helping first-time buyers, great communication skills, and a proven track record. Here at Sunrise Land Company, we love the chance to go the extra mile for first-time buyers.
Buying a home is a huge investment, but it doesn’t have to be a stressful one. With a little preparation and the right team in your corner, you can be well on your way to signing the paperwork, turning the keys, and walking through the door of the American dream
Written by Jon Becker
