Buying a home is one of the most important decisions you’ll ever make. It’s also one of the most expensive purchases many people will make in their lifetime. That’s why it pays to be well-informed before you enter into this big commitment. Following these ten tips will give you a solid foundation that can lead to a smooth home buyers experience, and save you money in the long run.
10 Tips for First Time Home Buyers
1. Get Pre-Approved for a Mortgage
When you are pre-approved for a mortgage, it means that the lender has already checked your credit score and determined that you are likely to be approved for a mortgage. This is important to do before you start looking for houses because it will give you an idea of how much you can afford. As well, it shows sellers that you are serious about buying a house, and they may be more likely to accept your offer if you already have pre-approval.
2. Consider Your Down Payment
Many people think they need to have a 20% down payment in order to buy a house, but that’s not always the case. In fact, there are many different financing options available that allow you to put down as little as 5% of the purchase price of the house. Many lenders prefer to see that you have some cash in order to reduce your risk, but others will accept borrowed funds or gifted funds for this purpose.
3. Look for Hidden Costs
When you buy a home, there are many “hidden” costs included in the closing fees associated with the deal. These include home inspection, property taxes, mortgage insurance, title insurance, and more. All of these costs add up quickly, so keep a close eye on them as they can be hidden land mines when you are shopping for houses.
4. Look in Different Areas
Don’t just look at homes in your immediate area if you want to buy a house. You can save a lot of money by looking for homes in neighbouring towns or cities that are more affordable. This will also allow you to comparison shop and see if the higher-priced area is actually worth it based on household income and the number of amenities available.
5. Get a Home Inspection
When you buy a used home, chances are it will need some repairs or renovations before you move in. These things are often overlooked by the seller because they are looking to make a quick buck, but you cannot do that if you don’t do your due diligence. Get a home inspection is done (or hire an inspector yourself) and then get multiple quotes on how much it would cost to fix these issues. That way, you can factor it into your offer or walk away because the property is not worth what they are asking for it.
6. Keep an Eye Out For Investor Properties
Many people are now opting to purchase homes as rental properties, so keep this in mind when you are shopping for houses. If the seller has multiple listings (and you can find out about them), then chances are they are an investor and you may be able to get the property at a significant discount.
7. Be Flexible On Closing Dates
It’s OK to ask for an early closing date (or even an early inspection date, if possible). If you have found the house of your dreams but it’s not yet ready to move in, then ask your agent if you can get an early closing date on the sale. If they are willing, it will allow you some more time to prepare while still having some certainty that the deal will close on time.
8. Find Ways To Reduce Your Costs
One quick way to reduce costs is by renegotiating some of the terms of the contract with your seller. If you can get a longer closing date, for example, then you will not have to pay as much interest on your loan over that period of time. Since it can be a lengthy process, ask your realtor what they think is possible and see if it will benefit both parties involved.
9. Shop for Mortgage Quotes
This is the biggest purchase you will ever make, so it makes sense to shop around and get multiple quotes on what you can afford. By doing this, you may be surprised at how much money you can save by getting multiple loan quotes from different lenders. Make sure that your realtor understands your needs a will do their best to find a mortgage that works for you (and your budget).
10. Consider Your Options
Realise that there are other options out there besides traditional financing when you buy a house. You can use alternative sources such as private lenders, or even get creative and borrow funds from family members if needed. There is no reason to let the bank take advantage of you, so be creative and work something out with them if possible.
As you can see, there are many things to consider when buying a house. When making your decision about which property or location is best for you and your family, keep these 10 tips in mind. We hope that they will help make the process of finding a home easier!