Purchasing a home for the first time can be both exciting and scary. There are myriad questions and checklists that you need to be prepared to ask and before you consider hiring a REALTOR©. The process does not need to be stressful, though. We’ve put together some tips and tricks to make the process easier for you.
Start saving early for a down payment. The typical down payment is 20%, but there are programs that allow first-time homebuyers to put down as little as 3%. You need to remember, though, that putting less money down up front means the possibility of mortgage insurance and higher payments over time. There are online calculators you can use to figure how much you can afford and what amount would be required down to hit your goal payment. There are even apps you can download on your phone to track how much money you’re saving along the way. You don’t even need to touch your bank account along the way; set it up so a little bit gets transferred automatically.
Check your credit and don’t open any new lines. Your credit can have a heavy impact on the interest charged on your mortgage since that can determine how much the bank is risking. Make sure you are keeping up with your payments owed and that you don’t owe any large debts. If you open any new lines of credit, companies perform what’s called a hard check. Your credit score could go down as much as fifty points. It takes as long as six months to a year for your score to recover after a hard check, so make sure you have strong credit before attempting approval for a mortgage.
Determine your price range and research mortgage rates. You need to decide how much house you can afford, whether it’s a single-family home, townhome, or condo, and where your absolute highest price range ends. This will be important when your research begins and you move forward with hiring a REALTOR© and applying for a loan. You may be approved for a higher amount than you can actually comfortably budget into your monthly bills, for example. Make sure you know exactly what kind of home you can afford, and what you are comfortable offering when you make those first steps.
Set aside extra money for after move-in and budget for closing costs. Closing costs generally run between 2% and 5% of the loan amount. Closing costs cover homeowners’ insurance, home inspections and title searches. You can negotiate closing costs with the seller of the home you’re purchasing, or even by negotiating your REALTOR’s© commission. After move-in, any extra monies you have set aside will be very helpful for additional projects that come up such as furniture purchases or last-minute repairs