Buying a house, although a significant achievement and milestone, can also be a very stressful process. That’s just the nature of investing money and jumping through the various steps of financing and navigating the housing market. The stress feels multiplied for first-time homebuyers, who are new to what can feel like a complicated process.
However, being prepared can help. A little research can go a long way to alleviate some stress and allow for some planning ahead of time.
Here are some tips for first-time buyers to help the process of purchasing your home go as smoothly as possible.
One of the best things you can do is have some money saved up for buying a house. These savings can be used toward a down payment. Many people choose to save 20% of their home’s total cost; however, this can be a significant amount and not feasible for many, especially first-time buyers.
Luckily, depending on the type of mortgage chosen, your credit score, and the lender, loan options are available that need a smaller down payment. There are programs aimed toward first-time buyers that require as little as 3% down.
Either way, the down payment is typically divided into an initial earnest money payment, and the rest is paid via cashier’s check at closing. Soon after, you’ll likely have to pay for other services, such as an inspection and appraisal. Down the road, there will also be closing costs—fees and expenses to pay to finalize your mortgage that is usually around 2-5% of the loan amount.
It’s also a good idea to have some savings on hand for moving expenses and repairs for when you’re finally ready to move in. Between moving trucks and new furnishings, moving can get expensive too.
Be a good candidate
A good candidate for a loan has a good credit score, can prove a steady and consistent income, and has a consistent history of paying bills.
Before you start the home-buying process, try to boost any areas that could use some help. Your credit score is crucial, and there are several ways to improve it over time, including paying bills on time, having several open lines of credit, and keeping low balances on credit cards.
Do your research
Do your research into the various services you’ll be utilizing when you buy a home. Shop around for a lender (consider private lending companies, credit unions, banks), programs, and mortgage types.
When looking at lenders, check out the different loan options available. Consider all your options, including:
- Conventional loans
- FHA (Federal Housing Authority) loans
- USDA (US Department of Agriculture) loans
- VA (Veterans Association) loans
Also, be on the lookout for assistant programs targeted directly to first-time homebuyers. Many states, counties, and cities have down payment assistance, closing cost assistance, tax credits, and low-interest-rate mortgage programs.
In the same vein, also research into your preferences for a home. Learn more about the area, what’s available, and a true budget for your search. It’s a great idea to make a list of needs, wants, and must-nots for your potential home so that you have an idea going into the search and can share it with your real estate agent.
For example, is a garage necessary? A big yard? Two bathrooms? Make a list to help as a guide.
Choose a great real estate agent
There’s no downplaying the importance of a great real estate agent. They are a key resource throughout every step of the shopping process; they’re market savvy, know your needs, act as a negotiator, and are legally obligated to have your best interests at heart.
The team at Sopris Realty is full of excellent agents who are ready and eager to assist first-time buyers.
Get an inspection
Once you find a home you’d like to purchase and are ready to go under contract, expect to buy an inspection. Your lender often requires an inspection because it looks for potential problems and risks regarding the property.
There will be a lot of paperwork during the home-buying process. It’s recommended to save digital files to your personal computer and print out physical copies for your records.