8 Tips For First Time Homebuyers
Jul 20, 2020
8 Tips For First Time Home Buyers
Congratulations! You've just made the incredible decision to purchase your first home! While there is much excitement involved in the home buying process, it can also be overwhelming without the proper support.
At Orizon Real Estate, we're here to help you through the process from start to finish, no matter if it's your first home or your tenth. Here is some advice we have for first time buyers to ease you into the transition to home ownership and make the buying process as simple as possible.
1. Finances first
The best way to get started on the home buying process is to evaluate your financial situation. Taking a look at your credit score, monthly income, monthly expenses, and savings will help you determine an appropriate budget.
Depending on the type of loan you qualify for, the required amount of your down payment will vary. The bigger the down payment you make, the smaller your monthly payments will be. Today, many homes can be purchased with a down payment of only 3%.
The other major piece of your financial puzzle is determining how much you can afford to pay per month on your mortgage. It's recommended that you spend no more than 25-29% of your monthly income on mortgage payments, but the amount you choose to spend is up to you. Be sure to keep in mind that other expenses, like repairs and maintenance, may come up, so you don't want to empty your pockets too much on your mortgage payments.
Another thing to consider is whether you have the finances available to you to complete renovation projects. This will help you decide on the type of homes to consider.
A few additional things to keep in mind when discussing your budget is annual property taxes, HOA fees, utilities, and routine maintenance.
2. Escrow funds
Something that first-time buyers are often unaware of is that there are closing costs associated with every home purchase. These are fees for a variety of things, like your title company and lender costs, just to name a few. Closing costs vary based on the loan amount and home price, but we recommend that you have about $3,000 above your down payment dedicated to this cause. Sometimes, some of your closing costs can be negotiated with the home seller, but you do want to be prepared in case you need to cover these yourself.
3. Consider your current and future home needs
When deciding on how much space and the particular needs of your home, remember to consider your future. A search for your ‘forever home' might look entirely different than a search for your ‘for now' home.
Some things to consider are:
- How long do you plan to live in your new home?
- What is your family structure, and do you expect your family to grow while you're in this home?
- If you have children, or are planning to have children, is there are particular school district you'd like to live in?
- Do you need space to work from home or complete hobbies?
- How do you plan to entertain in your home?
4. Talk to an agent first
Finding a good agent and talking to them about the home buying process is the best way to get started. An agent will help you to better understand the process and they will point you in the right direction for financing. Depending on your financial situation, there are several different financing routes to take, and a good agent will help you sort through your options. At Orizon, we have a team of dedicated agents that are knowledgeable in this area and happy to help you.
5. Get pre-approved
With the help of your agent, we highly recommend that you get pre-approved for a mortgage before you even begin looking. Most home offers are not even considered without a preapproval letter, so this is a very important step to take before searching for your dream home. Pre-approval is essentially a bank or mortgage company saying that they agree to finance your mortgage and laying out the specific conditions of your loan. This letter will also help you see what your monthly mortgage payment and any additional fees will be prior to committing to a particular home.
6. Maintain great communication with your agent
Updating your agent throughout each stage of your financing journey and home search is crucial. Your updates and clear communication will make it easy for them to help you find the perfect home for you and your family in the budget you are comfortable with.
7. Don't be afraid to ask questions
If you are feeling overwhelmed, anxious, or unsure throughout the process, be sure to ask your agent for assistance! Your agent is here for you and it is his or her job to walk you through each step of the process and provide any clarification you may need. You have the right to know what is going on, so don't hesitate to ask questions!
8. Enjoy the process
This one is simple: enjoy the process! You're only a first-time buyer once, so savor the experience and the lessons learned.
Are you ready to buy your first home? Whether you said "ABSOLUTELY!" or "Uh, maybe, but I still have questions," we are here to help you. Call Orizon Real Estate at 260-248-8961 to meet with an agent to help you today.