Because the real estate market is rapidly changing, you’ll feel overwhelmed and excited to be a first-time homebuyer. It can be tempting to impulsively buy a house that will only force you to settle a mortgage through retirement, affecting your financial goals. If you want to minimize the risks of that problem happening, be wise in making your choices.
Do things the right way, meaning picking a property that doesn’t hurt your finances and you’re comfortable with. Below is a guide meant for first-time homebuyers dreaming of buying their first property soon. Read on.
Table of Contents
Be Wise with Your Money
Keep your finances intact. Don’t touch your money or spend it on unnecessary things a few months before buying your dream house. Doing that can significantly affect your credit profile. Banks and lenders will need a proven track record and a paper trail so that you can get the best options available.
In addition, having an approved loan for a first-time homebuyer is necessary. But they might have doubts if you spend too much on expensive items, have too many debts, or open new accounts.
Set Aside for Emergencies
You’ll also need an emergency fund. That’s because buying your first house is the most expensive you’ll ever do in your lifetime. If you have already purchased your home, you’ll be solely independent and responsible for everything. That includes repairs.
Everything can quickly add up! Before planning to buy your first house, make sure you’ve settled your debts and set aside an emergency fund.
Have the House Inspected
Make sure to have the house inspected to know what you’re buying. It’ll also help you understand where your property lines are, minimizing the chances of arguing with neighbors or other people. Your chosen home will also determine your property tax, so you should have an accurate map of the whole place.
Save for the Down Payment
You can’t easily pick a house and pay for everything with cash. To make things easy, set aside money for a down payment. It should range from 10% to 20%. If you opt to pay for the 20% down payment, you won’t need private mortgage insurance.
Your private mortgage insurance will serve as a protection for the mortgage company if you fail to pay your loan and your house ends up getting foreclosed. PMI charges can reach up to 1% of the total loan amount. You’ll have to pay for it annually, making your monthly mortgage more costly.
Find the Right Size for You
Most first-time homebuyers get attracted to buying the biggest property they can find. But that doesn’t help. Huge properties only appeal to a particular population, and it’ll be the same if you’re reselling the property in the future. It’ll be hard to determine your property’s value in the future, so it’s best to be wise with your choices.
If you’re in for an adventure, you can opt to buy an old property because its floor space might be bigger than the biggest house in the area. You can also renovate it.
Get Pre-approved First
If you think you’ve amassed enough downpayment, you can start talking to mortgage lenders. Before looking for the property that meets your needs, let the lender approve your pre-approval application. That will tell real estate agents that you’re serious, which is an excellent means of getting ahead in the market.
During the pre-approval process, lenders will submit your loan for preliminary evaluation and verify your financial information. If you settled your debts on time, you might have to talk to lenders willing to work with first-time buyers with no credit profile to present.
Be Wise with Your Choices
Don’t let emotions influence your decisions because they’ll only hurt your goals. If you insist on following your feelings, you might regret that decision. Going with your guts and letting your emotions take you over are two different things. Going with your guts means that you know that you’re getting a property for a sweet deal.
Letting your emotions take you over is being obsessed with the design elements. Buying a house entails a lot of complex practices; you have to be wise in making a decision.
Find the Right Community
Bear in mind that the price and property alone aren’t the factors to consider. Talk to your real estate agents so that you can get a clearer picture of the neighborhood your family is planning to move in. In addition, learn about your new commute times. Walk around at different times to check the noise level and traffic condition.
It’ll also help you check if people are comfortable with the current state of things. One excellent tip is to pick a community that your family is comfortable with. If you already have a list of potential districts, visit a few open houses. You can get a clearer picture of that area by doing that.
Buying a house is the biggest investment you’ll make, so you want to avoid making any mistakes. Your real estate agent can help you ease the burden you’re carrying by helping you finish the buying process, negotiate a deal, and find the right home.