According to the National Association of REALTORS®, first-time homebuyers make up over 40% of all homes purchased.
If you have been thinking of buying your first home, I’d like to give you some useful tips to get you started, and I would love to chat with you about your dreams and goals of what that future home looks like to YOU! Contact me anytime to get started.
You will most likely want to know everything you can before making one of the biggest purchases of your life. Here are 10 basic considerations to make that first purchase a positive experience for YOU:
1. Think good versus poor credit. Poor credit will make you a much larger risk in a lender’s eyes, and a larger risk means higher interest rates and a larger monthly mortgage payment. Always strive to pay your credit card payments, auto loans, rent, and other obligations on time, all the time. In addition, watch your spending and keep your credit card balances below 30% of your available credit. Banks may see high balances as a sign of weakness in managing your money, but low balances and good payment history will fare well for you.
2. Consider property taxes and insurance. Keep in mind that in addition to your mortgage payment, you will have to pay property taxes and homeowner’s insurance. Most of the time these are included in your mortgage payment by way of an escrow account.
Once you own a home, mortgage interest and property taxes are generally deductible when filing your income tax return. This means that even if your monthly housing costs are a bit larger than your rent payment was, what you save in taxes can make up for the difference.
3. The one thing that will be FREE to YOU. Real estate agents like myself are at the center of most property transactions. It’s important for you to know what an agent will do for you, how you will be represented, and how the home-buying process works. When I represent you as your agent, my services are covered by the seller and are FREE to YOU!
4. Consider what location will suit you best. Carefully consider your needs, the needs of any additional household members, and your preferences in terms of commuting, shopping, recreation, and other factors important to you before beginning your home search.
5. Plan on getting a home inspection. A professional inspection will help you understand the condition of the property you want to buy and the repair bills you are likely to face in subsequent years. You will want to take the cost of this home inspection into account when submitting an offer on a property. There are contingency safeguards built into an Agreement of Sale that protect you should something major be discovered that causes you not to want to move forward with the purchase.
6. First things first: Get Pre-Approved. Getting a pre-approval from a lender will help you know just how much you can borrow with a payment you are comfortable paying, and it will show sellers that you are a qualified and serious buyer.
7. Save up as much money as you can. You will need to have some money for a down payment, closing costs, the home inspection, plus moving and other expenses. While there are some down-payment and closing-cost assistance programs available to the qualified buyer, you will still incur some expenses so it is best to forego any big trips, avoid buying on credit or obtaining new debt until after you have moved into your new home.
8. Examine the different loan products available to you — When applying for your mortgage loan, your loan officer will select the best mortgage product for you. Conventional, FHA, VA and USDA are some of the options available. Some Delaware State Housing programs require little down and have liberal qualification standards for the qualified buyer.
9. Consider the possibility of gifts and grants. According to the National Association of REALTORS®, 22% of all first-time homebuyers receive gifts from relatives and friends. In addition, some companies offer grants and other incentives to employees who are buying their first home. Community groups may have programs and financing in place for first-time homebuyers, and the federal government has established special programs for teachers and police officers.
10. Start now, don’t put it off! Start taking steps now to get yourself ready to buy a home. In most markets, the longer you wait to buy the higher the home prices will be and the higher your monthly mortgage payment will be.
Once you are ready to take that first step toward homeownership, ask as many questions as you need to. Becoming a first-time homebuyer might seem challenging, but lots of people do it each year, and YOU can too!