Looking to buy a home, but unsure about where to begin? You’re not alone. First-time buyers make up about 34% of all home buyers and they’re all asking the same questions. If you’re looking for advice for first-time home buyers, this guide is here to help you through your first home-buying journey.
With these first-time home buyer tips, purchasing a home can become so much easier and less of an intimidating task. From the preplanning to the actual process, and even what comes after the deal is signed, there are ways to prepare for your first-time home purchase to make it more enjoyable and productive. Keep reading or use the links below to get started with our tips for buying your first house.
Tips for First-Time Buyers
First-time homebuyer tips can save you a lot of headache as you navigate this exciting but complex process. You’ll find tips like how to prepare financially, how to navigate the home-buying process, and ways you can ensure you’re ready when the time comes to close.
Tips for Preparing to Buy a Home
The housing market can be a daunting field to enter when wanting to purchase a home.There are many questions new home buyers have about what exact expenses to prepare for when looking to purchase. Below are a few tips to help you start off on the right foot for your home-buying journey as well as some mistakes to avoid when doing so.
- Make Sure You’re Financially Prepared
The top first-time home buyer tip when looking to buy your first home is to make sure you begin to financially prepare well ahead of time. First, you want to check your credit to see if it’s in good shape before you begin looking at homes. Most lenders look at your credit score as a major factor of qualifying a borrower for a loan. And, if your credit doesn’t make the cut, you might not be able to get a home loan at all—or you might end up paying significantly more.
Another important aspect of financially preparing to buy a house is making sure you have enough saved for a down payment for whatever home you ultimately decide on.
Down payments can vary depending on:
- Price of the house
- Type of mortgage you’re applying for
- Your financial circumstances
While you may have to put down as much as 20%, there are some mortgage programs that allow you to put down as little as 3% or even no down payment at all. Keep in mind that the effect of inflation on housing can impact how far your money will go depending on how far in advance you’re planning.
- Research the Housing Market in Your Desired Location
When buying a home, one must know what they are looking for in the housing market. This means looking into your desired location you’d like to live. One of the key tips for buying your first house includes thoroughly researching your desired location’s housing market.
Understanding how competitive the market is and the average cost of their homes can give you an idea of the budget for living on your own. It can also help you narrow down your potential location of your future home purchase that fits within your budget.
- Know What Kind of House You’re Interested in
Another way to narrow down your home buying options is deciding what kind of house you are interested in. from townhomes to a single-family home, there are various types of houses to choose from. Once you decide what kind of home fits your style of living and desired amenities,you search for a house will be much more focused.
- Find Out What Types of Mortgage Programs You Can Qualify for
When buying homes, the next step is looking for types of mortgage programs you may qualify for as a first-time home buyer. Different programs aim to lower down payments and even interest rates, or help make homeownership more accessible to those with less income.
Each program has its own qualifications and application process to determine if you are eligible. A few examples of Federal Housing Administration (FHA) mortgage programs include:
- Disaster Victims Mortgages 203(h)
- Energy-Efficient Mortgages (EEM)
- Home Equity Conversion Mortgage (HECM) Seniors
- Hawaiian Home Lands
- Title I Improvements
- Urban Renewal
If you think any of these might fit your circumstances, do more research to see if it’s an option for you.
Tips for the Home-Buying Process
First-time home buyer tips can assist you in the process of buying. This covers deciding on having a realtor or not, keeping your budget in mind, and potentially learning how to negotiate on a housing price.
- Get Pre-Approved for a Mortgage
Pre-approval for a mortgage gives home buyers a clearer sense of potential mortgage terms based on a comprehensive look at your finances. Pre-approvals usually include: estimates of your loan amount, interest rate, and monthly mortgage payment, all with an expiration date. With this pre-approval in your hands, you can rest a little easier and be more confident in gaining offers from lenders as most real estate won’t consider your offer without one.
Pre-approvals can streamline your process by putting you ahead of those who do not have one when buying a home as lenders and real estate know all your available finances. With the letter, you can also begin budgeting your financial plan sooner and be able to quicken the process of buying a home.
- Consider Using a Realtor or Real Estate Agent
During the homebuying process, put some consideration in using a realtor or real estate agent when starting your home buying journey. The main benefit of working with a real estate professional is that they take a lot of the process off your hands and can provide you with guidance while shopping for a home.
Additionally, a realtor can access more listings than the average homebuyer will be able to on their own, widening the scope of potential homes you can choose from. With their expertise, they can make the market more understandable and even help you negotiate a better deal when you’re ready to buy.
Real estate agents can also give you more first-time buyer tips as they are more familiar with how the housing market works and can look for exactly what you want.
- Keep Your Budget Front of Mind
A key first-time home buyer tip is to always keep your budget in mind when you begin looking at homes. With a large investment, going over budget can be very damaging to your financial health, especially when it impacts your finances past the initial purchase of a home. Between a down payment that puts a strain on your savings and high mortgage payments that suck up your monthly budget and put you behind on other bills, it can impact your financial stability for a long time.
While it can be tempting, your future self will likely be thankful you didn’t end up going over your budget.
- Negotiate the Price
When negotiating with a seller, you are trying to secure a lower price than listed for the buyer. One should consider negotiating with a seller after a bit of research on the property is done. For example, when looking at homes, look into the cost similar homes are being sold for, how long they were on the market and the final sale price.
With this background information, you can potentially see if the sale price is too high for the area and can work to negotiate a price based on the competition. Your real estate agent can also be helpful in the negotiation process if you have one.
Generally speaking, the housing market is currently highly competitive in most areas. As such, buyers typically purchased their homes for 100% of the asking price. If you believe there is an opportunity to negotiate with a seller, do so based on the market and the house itself but don’t necessarily expect to get substantial savings right now.
Tips for After You’ve Closed on a House
Once you’ve signed the dotted line, take a breath of relief but don’t drop the ball just yet, there’s still more to do. Here are some tips to keep in mind once you’ve closed on your house:
- Create a Home Budget
After you close on a house, the next step after moving in is creating a home budget. You’ll want to include all of your bills like electricity, gas, internet, and potential homeowners association fees. If you don’t know where to begin, a household budget template can help get you started on the right track as a new homeowner. Once you have the template you can customize it to fit your needs.
- Start a Savings for Emergency Repairs and Maintenance
With a new home comes new savings goals, like putting money away for emergency repairs and maintenance. As a homeowner, these repairs, whether it be new flooring or installing a new air conditioning system, are solely up to you as the owner to complete. Starting a savings specifically for these reasons can keep your mind at ease when an unexpected repair is needed.
- Get All Homeownership Documentation in Order
Buying a new home comes with quite a bit of paperwork. Once you’ve purchased your new home, gather all your homeownership documents and keep them in a safe place for the future when you might need them in the future—like refinancing your loan. These documents can include:
- House deed
- Closing sale documents
- Home improvement receipts
- Mortgage payoff statements
- Private/primary mortgage insurance statements and canceled checks
- Property tax payments
- Make a To-Do List of All Your Updates & Housekeeping Tasks
When you move in, you’re likely going to want to make some updates, unless you built your home from scratch. To help you stay on track and make sure you’re prioritizing what you need to get done first, you might want to make a to-do list of all the tasks you want to take on. Not only that, but it can help you budget and save up for future projects.
Similarly planning housekeeping tasks can help you keep your home in top notch shape if you plan on selling in the future or want your home to withstand normal wear and tear.
Questions to Ask Yourself as a First-Time Buyer
To round out our first-time home buyer tips, here are some basic questions to ask yourself as you get ready to buy your first home:
- What is your housing budget?
- How much should you save for a down payment?
- What kind of home are you looking for?
- What is your ideal location?
- What lifestyle do you want to maintain with your new home?
- How is the home’s foundation, roofing, and overall structure?
- What’s the neighborhood like, including schools and retail?
- How much do I save for moving expenses, such as moving vans?
- What amenities does your home come with?
Buying Your First Home Will Go Smoother with These Tips
The decision to purchase your first home is a big and exciting task in one’s life. With these first-time home buyer tips, buying your first home will go smoother than anticipated. Preparation can begin as early as deciding what type of home you are searching for to the base of developing a housing budget and looking for realtors to help you find the right home. Along with these tips, the Mint app can help you keep track of your budget and savings throughout the home-buying process with ease.
Sources: National Association of Realtors® | U.S. Department of Housing and Urban Development
Read more about buying your first home:
This guide will help you choose a realtor.
Learn more about the different types of homes.
Get an idea of how much you should save for a down payment.
This post covers the basics of how mortgage loans work.
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