First Time Home Buyer Advice
Buying your first home can be a very exciting experience- but it can also seem overwhelming and can leave you asking lots of questions. New home buyers are confused, anxious, and concerned when it comes to finding a real estate agent, choosing the house, and getting financing. Don’t let yourself be overwhelmed: Here are a few easy steps to get started!
Calculate How Much You Afford
There are two major factors that you need to consider, how much you can borrow and how much of a monthly payment you can realistically afford. Keep in mind you will most likely be pre-qualified for an amount that may not work with your budget. As a general rule of thumb, your annual mortgage payment, taxes and homeowner’s insurance shouldn’t exceed 28% of your gross income. Use this home buying worksheet to help you figure the costs.
In addition, you will also need to determine your closing costs, which can add up to 3% to 5% of your total home’s value. This closing cost estimator will help to give you a better understanding of the costs.
Do Your Research-Start Your Search Online
Almost 80% of all home searches today begin on the Internet. With just a few clicks of the mouse, home buyers can search through hundreds of online listings, view virtual tours, and sort through dozens of photographs and aerial shots of neighborhoods and homes. With detailed knowledge about neighborhoods, school districts or any other factors that are important to you, you can narrow your search to find your perfect home even before you step foot outside!
Look For Flexibility in First Time Home Loans
What do you need to look for in a mortgage program as a first time home buyer? Here are a couple of tips and guidelines:
1. Flexibility – Make sure you get a program that offers a monthly payment you can really afford. Be honest with your mortgage broker if your payment seems out of reach. You may be able to obtain a three or five year ARM mortgage with a lower interest rate and lower payments or an interest only loan to get you into your home without giant mortgage payments.
2. Down payment assistance. If you are unable to pay a down payment there are programs available to help you. Down Payment Assistance Programs are loan programs designed to assist first-time home buyers with the required down payment and closing costs.
3. Long Term Goal – Are you planning on staying in this home forever, for three years, for five years? Communicate your goals to your lender because in situations like these they may have several mortgage options from which you can choose.
The Home Inspection
After you find a home and make an offer, a house inspection is often ordered. You will need to make arrangements to have the property inspected by a professional. Inspections may be required by law with the elements inspected varying by region, state, and/or your agreement.
A home inspector can provide you with a complete service that covers from the basement to the attic, as well as the exterior of the home, walls, chimneys, and fixed appliances such as refrigerators and stoves. Other specific elements that can be included: (not a complete list)
• Termite inspection
• Plumbing
• Water Quality
• Lead
• Radon
• Septic Tank
• Asbestos
• Electricity
It is important to hire a skilled professional who will be able to give you a comprehensive analysis of the home’s major systems and components—apart from anyone’s interests other than your own. Visit the American Society for Home Inspectors for more information and to find a professional in your area.
These are just a few of the subjects to consider when purchasing a first home. While it can be exciting to look at different types of homes, don’t be tempted into excess when first time home buying. Don’t purchase a home that is really more than you can afford and you need to be strong and stay within your budget. For more information on all the aspects involved in purchasing a home from start to finish, click here. Purchasing your first home does take research and work, but purchasing a home is the American dream and you can fulfill your dreams!
