5 Tips For First-Time Home Buyers

5 Tips For First-Time Home Buyers

As the idea of first-time homeownership is very exciting, keep in mind that every angle is important on such big decision. Therefore, here is a few tips to help you out.

By Luis Valdivia

It's quite normal to get excited with the thought of getting a new home, especially if it's your first; However, there are a few things that are very important to this process so here are a few tips to keep in mind. 

 

1. Make sure you fully understand what is to commit to a loan.

Although it might seem obvious, this can sometimes be overlooked. Average mortgage loan terms are usually 15 to 30 years. Even if you're not planning on living in that property for that long, it is a serious commitment to keeping in mind. Perhaps ask yourself the following questions:


- Am I ready to commit to this for at least 5 years?
- Do I have an emergency fund that can cover at least 4 months of expenses?
- Do I have a stable job that can provide the income for payments?

2. Don’t Skip The Preapproval

You've probably heard your real estate agent mention this option when starting the process, so don't skip on it. It’s definitely a really good idea to get a mortgage preapproval before you start going through the properties.

It's also very important to understand the difference between the following two:

A prequalification is an estimate of the amount of home loan you can get. It’s mainly based on an informal evaluation of your income.

A mortgage preapproval is a document from a lender telling you how much you can get. This is a deeper analysis based on things such as W-2s, bank statements, and your credit score.

3. Maintain Your Credit

This one is most likely overlooked. If you have a good standing credit at the time you're beginning the process, you must do your best to maintain it because it will be run again throughout the process, especially at the end right before the closing and mortgage.

4. Understand your Benefits/Options & Don’t Forget Closing Costs

The Federal Housing Administration (FHA) helps people when they're buying their first house. If you qualify as a first-time homebuyer, you may have access to several benefits such as state programs, tax breaks, an FHA loan, etc.
Also, don't assume that the down payment is the only thing you need to close on your mortgage loan. You’ll also need to cover closing costs which can add up to a decent sum, so keep that in mind. These might include several fees such as attorney fees, pest inspection fees, appraisal fees, escrow fees, title insurance expenses, etc.

5. Hire An Inspector

Highly recommended to hire a professional inspector before you get your first home. An inspection is different from the appraisal required by your lender.
The appraisal is basically a rough idea given by the appraiser for you and your lender to know what other similar properties cost. 
On the other hand, the Inspector will go through very specific details, such as repairs needed. This way you can get a more accurate picture of the property's value.  
 

 

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By Luis Valdivia