by Lina Martinez
Buying a home is said to be one of the most stressful things we go through, and that it is even worse for first-time buyers. There are so many things that can go wrong, and ways to help prevent that from happening.
Save A Down Payment
There is not much use looking for a home until you have saved a down payment. It just leads to disappointment if you find the perfect place and cannot proceed because you have not got a deposit.
It is fairly standard that lenders expect you to put down 20% of the value of the home, but there are special schemes for first-time buyers that will accept much less. You just have to be aware that you may have to pay a slightly higher interest rate if you go with ones of them.
You also have to remember that you will need more money than just the deposit. You will also need to pay closing costs, which can be anywhere between 2% and 5% of your loan amount, homeowners insurance, home inspection fees, and title searches. Sometimes it is possible that the seller will help towards these costs, but you cannot guarantee that so need to have the money ion the bank.
When you have the keys to your first home, you have an empty shell and need to be able to either buy the very basics such as beds, chairs, table cooker, and fridge, or pay to have them moved if you already have them elsewhere.
It is these costs that are over and above the down payment that first-time buyers tend to forget, and then they hit financial problems before they have even moved in.
Check Out Your Mortgage Options
There are so many financial institutions offering mortgages that all the information thrown at you can be mind-numbing. Everyone will insist their deal is the best, but as an inexperienced layperson how are you supposed to choose between them?
Mortgage brokers like Altrua Financial are the answer. They will understand all the ins and outs, what the small print means and be able to advise you accordingly. Is a conventional mortgage best for you, or a Federal Housing Administration loan?
Interest rates, penalty clauses for early settlement if you decide to move in 5 years time, and the upfront charges are all things that need to be considered.
It is the overall deal that matters, and the best is not always the one that charges the lowest rates of interest. Some states have special schemes to help first-time buyers and the professionals will know if you fit the criteria for one of these.
Mortgage brokers will also be able to advise you about the amount you will be able to borrow. This is important so that you are not searching for properties outside of your budget. Once you know the amount of the mortgage you will be allowed, you can make sure you do not exceed the amount in your property search as to do so is a sure recipe for financial disaster.
Ask For A Preapproval Letter
This is a simple step that could secure the home of your dreams. The mortgage provider gives you a letter that confirms they are willing to give you a loan and for how much. This can be very useful if two buyers are after the same property and the other interested party has not bothered to take this step.
Looking For The Right Property
You are likely to be working quite closely with a realtor, so endeavor to find one that you get along with. Let them know the type of property you want and the top limit of the price that you can go to. The two might not match, unfortunately, but if there is a property that you want within your price range, they are the people to help you buy it successfully.
Keep an open mind about the types of homes you view. Do not discount anything as sometimes something you thought would not be suitable can turn out to be the best option.
Do not be afraid to ask lots of questions. In fact, the more information you can get from the seller the better. Ask how old the heating and air conditioning systems are and when they were last services. You need to know if any major repairs have been necessary in recent years, and ask them to be honest about any problems they have with the neighborhood.
While you are viewing, look closely for water stains on walls, inside or outside, as these can be a sign of something serious. Make a mental note of any other problems you see as well.
Repairs can be used as a bargaining tool that may win you the home at a lower price. Never be afraid to negotiate the asking price, or for help with things such as the closing costs. It is a buyers market currently in the US, and the seller will not want to lose the sale because of having to accept a slightly lower price.
Attend The Home Inspection
The home inspection is a vital part of buying any home, and you should be there when it takes place. You need to see what parts of the home have been looked at, and to know what things the inspection covers. There are varying types, and not all inspections cover such things as pests, radon or mold.
Don’t be afraid to ask the inspector to look closer at anything that is concerning you, and ask as many questions as you can. They will answer them all except when you ask them ‘Should I buy this house’. They are not allowed to say yes or no to that. They just compile a report and the decision is then yours from the information therein.
Ensure You Are Properly Insured
Most times, this insurance really is a case of getting what you pay for. Whoever grants your mortgage will insist on this cover, but you really need to be certain what a policy gives your protection for. Generally, the cheaper the policy the less cover you will have, but that is not always the case.
Most homeowners insurances do not cover natural disasters such as floods, and you need to take out an extra policy for that, especially if your new home is in an area that is prone to floods.
Will Your New Home Be Enough For Tomorrow?
When you are buying your first home it is very easy to look for something that suits your current needs, However, you should be looking to the future as well. Will the home still be big enough if you decide to start a family, for instance, or does it have a spare room you can turn into an office if you start a new business from home?
Moving home is very expensive and you do not want to have to do that more often than you need to, particularly if you are happy in the first home you bought. If your budget allows, buy something that has space for you to expand. As well as saving you moving costs, this will mean you are bringing your mortgage down every year without having to borrow more for a bigger home.
As scary as buying your first home can be, it can also be very exciting. When you get the keys and move in, suddenly you are the master of your own haven, and that on its own is an achievement you should be proud of.