10 Important Tips for First Time Homebuyers

Purchasing a home for the first time can be challenging. There are so many moving factors that can influence your experience, such as changing neighborhoods, hiring professionals, or planning your finances. To feel the most prepared and organized, keep these ten tips in mind while planning your first home purchase.

1. Identify Your Home Needs

Sitting down to make a comprehensive list of qualities you want and need in your new home will help manage your expectations and stress levels. Do your pets require a walkable neighborhood or a large yard? How many bedrooms do you anticipate needing for your family? With so many property options, understanding the benefits of each will help you make the best decision.

2. Investigate the Neighborhood

You may think you’ve found your dream home and layout but remember to consider the neighborhood as well. Investigating crime rates, commute times, school quality, and accessibility to local amenities are all great places to start. Visiting potential neighborhoods at different times on both weekdays and the weekend can help you understand how the community operates and how your family can fit. On weekends, are people doing yardwork outside or spending time with their pets? Are there children that play games on the street? Is there less activity during weekly working hours? Just like individual people, neighborhoods can also develop habitual routines. During your search, be sure to note what kind of neighborhood you’re the most drawn to and why.

3. Build Your Savings Early

Building your savings as early as possible is important due to so many expenses throughout the homebuying process. These can include deposits, home inspections, appraisals, down payments, and closing costs. Having a solid foundation in your savings will help manage stress and cover any additional costs your home may have after moving in, like property taxes and maintenance. A mortgage calculator is another helpful tool to accurately estimate what your possible payments could look like.

Setting up your savings can be as simple as transferring a portion of your paycheck, bonuses, and tax refunds into a separate account. Cutting down costs such as eating takeout or unnecessary entertainment plans will help establish a budget as well.

4. Work on Building and Maintaining Your Credit

A decent credit score is often a requirement for loans and a mortgage. If you lack credit history or have a low score, consider getting a secured credit card and make your payments timely.  Maintaining your credit proves to a lender that you’re a low-risk borrower and will likely stay on top of your loan payments. Keep in mind that making other major purchases when you’re about to buy a home, such as a new car, can negatively impact your credit and interest rates.

5. Understanding Pre-Approval Versus Pre-Qualifying

Don’t be fooled by the similarity of these terms. While pre-qualification is helpful, being pre-approved gives formal verification of how much money you can borrow based on provided financial documentation. This gives you a distinct advantage in a competitive market and could be what puts you a step ahead in a bidding war.

There are still things to consider with pre-approvals, however. For one, a preapproval letter is only applicable for a limited amount of time, typically 90 days. During this time, be sure to maintain your level of credit and savings. Lenders will often re-assess your records and statements before finalizing.

6. Find a Real Estate Agent

Finding a real estate agent that can work with your family and your budget can help save time, money, and unnecessary stress. If you already have an idea of property specifics and an established budget, a real estate agent can keep an eye out for similar options within your area. Agents also have a wealth of knowledge about local trends, names of professionals that may be helpful (such as a home inspector), and negotiation tactics that you may miss out on.

7. Have the Home Inspected

In the same vein, having a potential home inspected by a professional shouldn’t be overlooked. When deciding on an inspector, make sure they operate with a valid license or are insured. If possible, attend the home inspection. While you’ll receive a written report at the end, having an inspector answer your questions as they occur is the best way to understand potential problems. Like a real estate agent, an inspector has more knowledge and experience than the average person would on their own. You have the option to add an inspection contngency to your offer to further protect yourself should any issues come up in the inspection.

8. Don’t Be Afraid to Negotiate

When you’re ready to make an offer, don’t feel pressured to succumb to the seller’s top price. Adding contingencies to your offer is one of the many ways you can negotiate costs with a seller, as well as closing costs.

If you decide to take advantage of a real estate agent’s expertise, discuss your best negotiation options with them, such as comparable properties or appraisal results. Ask your agent about ways you can make an offer that is competitive while also being within your budget and reflective of the home’s value. Remember to be cautious about making an offer that is higher than you can afford just because you’re worried about competition.

An alternative option is including a personalized letter to the seller regarding the reasons you’re interested in the property. This will help you stand out against other bids and appeals to the emotional compassion of the seller.

9. Payment Assistance

There are several first-time homebuyer and down payment assistance programs that can help a buyer with down payments and closing costs. Beyond contacting the Department of Housing and Urban Development, you may be interested in looking for non-profit organizations in your area, visiting your local government, or searching the government grant database for home mortgage grants. These programs can have several limitations or restrictions, however, so it’s best to speak to your Loan Originator to explore your best options.

10. Understand Your Loan Options

Understanding and deciding on a loan is a large commitment. Whether you choose a conventional loan from a private lender, or a government backed loan like an FHA or VA, be sure you’re informed about what you qualify for and how much you’ll be paying.

No matter the choice, know our Loan Originators will help you confidently find the best options for you while providing excellent and accurate knowledge.

We know it’s easy to feel alone in the homebuying process. Understanding current market trends and payment options are hard enough to figure out without the additional pressure and exhaustion associated with looking for the perfect home. We are here to help through every step of the purchasing process, no matter your starting point. Contact us today to learn more.