15 Mar Top 10 Tips For Buying Your First Home
Homeownership is the bona fide American dream for many people in the United States. Imagining how you’d decorate, if you’d remodel the kitchen and bathrooms, or what colors you’d paint the walls are just a few things to look forward to. But are you ready to start shopping for homes and making the biggest purchase of your life? Here are the top 10 tips!
1. Know where you stand with your credit.
Is your credit outstanding, average, or poor? Do you have lots of debt? If your credit is poor, focusing on paying off your debts to improve your score is an important step in obtaining a mortgage pre-approval.
2. Have a down payment.
It’s very, very common to put 20% down, but some lenders will allow less. And, with some first-time home buyer programs allowing as little as 3% down, it can help move the process along. However, keep in mind that having less than 20% could mean higher costs, interest rates, and paying for private mortgage insurance.
3. Get the right loan product.
FHA, Conventional, VA… What do they all mean and which one is best for you?
FHA: Federal Housing Administration loan that typically allows you to put down as little as 3%. This type of loan is generally right for home buyers with little savings to put towards a down payment. However, these loans are limited and aren’t very flexible.
Conventional: Conventional mortgages are by far the most common, and typically borrowers with this type of loan tend to put at least 20% down, if not more. A higher down payment means lower monthly payments, so this is an attractive loan product to many home buyers.
VA: Veterans Affairs loan that works best for veterans who have served 90 consecutive days during wartime, 180 days during peacetime, or 6 years in the reserves. You do have to qualify for this type of loan, and there are strict requirements on the type of home you can purchase (for example, you cannot buy a “fixer-upper”).
4. Get pre-approved for a mortgage and compare loan offers from different lenders.
It’s kind of like speed dating, and you definitely want to match your financial history with the best offer possible, as rates vary from lender to lender, much like closing costs.
5. Don’t apply for new credit cards, loans, or lines of credit… In fact, just hit ‘pause’ completely!
The last thing you want to do is apply for another credit card or take out a new car loan, as these factors will drop your credit score and can affect your ability to obtain a mortgage pre-approval because loan officers have to factor in your DTI (debt-to-income ratio).
6. What’s your budget?
Sure, you may be able to afford a $300,000 home, but will it pinch your pennies too much? The last thing you want to have is to own a beautiful home but be house-poor. Be realistic with your budget – so you still have the ability to do the fun things in life, like travel or go on vacations.
7. Must-have features.
How many bedrooms and bathrooms do you want? Do you want an attached or detached garage? Are you looking for a large backyard? Is historical charm important to you? Don’t buy a house that works for your needs today; you want to buy a home that works for all of your future tomorrows… especially if you’re planning on creating or expanding your family.
8. Hire a real estate agent.
Since you’re making the biggest investment in your life, making sure you have the right agent is critical. Are they certified negotiation experts? Do you feel like they’re rooting for you and want to help you win?
9. Focus less on cosmetics and more on the potential.
Hate the bright orange kitchen and wallpapered bathroom? Sure, they might be annoying. But are the bones of the house in great condition? Perfect. When you can look past these minor “flaws” and open your eyes to the incredible potential of a home, magic will happen. A paint job isn’t too expensive (especially if you do it yourself) and can transform the look and feel of a home quickly.
10. Get a home inspection completed.
While it’s not necessarily a requirement to get a home inspection completed on your new home, it’s always a great idea – even if it’s a brand-new home – to have an independent home inspector come out and ensure there are no current or potential issues. If there are, this can allow those problems to get fixed by the seller or you may choose to find a different home altogether.
Ready to start the process of buying your first home? Contact Jeff Anderson and The Anderson Team at 612-386-8600 and he can help you navigate your purchase!