For the first time home buyer, the entire process is a little intimidating. It is likely the biggest purchase that you will make in your life. Therefore, it is vital to get all of the information available in making the right decisions to get the best deal possible. Here you will find how to make the most out of your first home buying experience!
Tips for the First-Time Home Buyer
1. Determining Affordability
Affordability is just about the leading deciding factor in the home search. Common practice dictates that a home’s cost should not exceed more than three to five times the sum of the household’s annual income. Furthermore, the buyer’s total debt payments should be a maximum of 36 percent the total household income.
2. Get Your Credit in Order
Not many people realize that credit score is one of the most essential elements in securing a loan for a home. If you think a home purchase is imminent, it is best to obtain your credit report and pay all outstanding accounts or collections at least six months in advance. Whatever amends can be made will help in getting the best loan possible.
3. Hire a Real Estate Agent
No one knows all of the intricacies of buying homes more than real estate agents. They have an intense and up-to-date knowledge of the constantly changing market, including yearly changes on housing laws and regulations. They can discover unrealized problems on the property and can best negotiate sales contract terms.
4. Evaluate the Area
Before even looking at a property or neighborhood, it is crucial that you conduct extensive research to make sure things like street traffic, school district, town proximity and parking are adequate for your living situation.
5. Get Pre-Approved for a Mortgage
After getting pre-qualified, getting pre-approved for a mortgage is the next logical step. This process will inform the seller that the potential home buyer can actually afford the home in advance. This will also expedite the entire process because it shows the seller that the offer is legitimate and it also prevents the property going to someone who already has their financing settled.
6. Get the Property Appraised and Inspected
It is important to make sure any potential property is appraised and inspected. An appraisal requires a licensed appraiser to inspect a home’s condition, size, and quality. After this, they will study similar homes in the area and determine a fair market value, which is the anticipated home’s value in an open, competitive market, so the buyer does not overpay. Furthermore, it is also necessary for the home to be inspected so any deficiencies or defects do not go unnoticed and so they can be remedied before any purchase is made. This practice is usually written into the contingency clause of the purchase offer.
7. Get Homeowner’s Insurance
Normally called “hazard insurance,” homeowner’s insurance is almost always a requirement of any loan approval. With an insurance policy in place, it assures the lender that the home can be properly rebuilt to specifications if there was ever an emergency. Most lenders will never even approve a loan if there is not a solid policy worked out.
If you follow these few tips, you will find your first home in no time!
