Buying your first home is a great experience as long as you know what you’re doing. As a first-time homebuyer, there are things you need to know before you start talking with a real estate agent or make an offer on a house. That way, you can avoid common pitfalls and make the process go as smoothly as possible.
So, if you’re considering buying your first home, here’s a list of some of the things you should know before getting started.
Know Your Budget
Understanding your budget is an important part of buying your first home. It can be easy to commit to something you can’t afford if you don’t take the time to carefully consider your money situation. You need to consider your monthly income, your current monthly expenses and the monthly cost of your mortgage, insurance, and property tax. While these expenses add up quickly, it’s essential that you stick to your budget, or you could find yourself in trouble later on.
Understand Mortgage Basics
If you’re going to buy a home, make sure you know how your mortgage works first. Mortgages are a critical tool for homebuyers, but they differ in terms of interest rates, down payment required, and the length of the loan. You can find out more about how home loans work by buying a few books about mortgages and real estate. While some people buy homes with cash, most people need a mortgage.
Explore All Your Loan Options
Traditional mortgages may be the most common type of home loan, but there may be other options available to you as well. If you’re a veteran or active duty service member, VA loans in Washington State, for example, can take a ton of stress out of getting a loan to buy a home. Thanks to low-interest rates, a simple approval process and no down payment in some cases, VA loans can help you save money and get into a home sooner as a thank-you for your service.
Be Aware of Fees
It’s also important that you understand that there are additional costs that come with buying a home. For example, you have to pay closing costs—which are generally between 2 and 5 percent of the total loan amount—and commission to your real estate agent. Closing costs have to be paid upfront, so make sure you understand these fees, how much they’re going to cost you, and when you’re going to have to pay them.
Calculate Your Down Payment
The first thing you have to do when you’re buying a home is make a down payment. This down payment gives you an immediate ownership stake in your home, and the amount you’re required to pay depends on the total cost of the home. However, you can make a larger down payment than the minimum required to make a larger dent in your mortgage. Just make sure you have money for a down payment before you begin applying for mortgages and looking at homes.
Keep in mind that down payments can vary significantly depending on where you’re buying. Research average down payments by state or city to get a better idea of what to expect when narrowing down your options.
Take Your Time
Just because you want to buy a home doesn’t mean you should rush the process. If you checked home listings and can’t find anything that fits your needs or budget, don’t rush it. Take your time to save up a little more or wait for a better home to hit the market. When you’re spending hundreds of thousands of dollars for a home you might live in for decades, it’s important to find something you really like. Plus, you don’t want to stress yourself out worrying about getting a home right away.
One thing to consider is broadening your search area. For example, San Francisco homes are notoriously expensive, but moving just a short drive outside of the city can help you check off budget and location. Instead of searching San Francisco, check home listings in Oakland.
When you’re raising a family, navigating the home-buying process for the first time can be confusing. Fortunately, there’s lots of information online that can help you figure things out. The best way to get a home you love is to spend time figuring out your budget, what you need out of a home, and what your best loan option is. Good luck on your home-buying journey!Category: Home