Tips for First Time Homeowners
Are you tired of making large monthly rent payments with no return on your investment? Maybe it’s time to think of investing in your future. If you are considering the purchase of your first home, here are some tips that will help your experience go smoothly.
First Homes Are Not Dream Homes
You may be planning to have a family in a few years, but your first home purchase should meet your current requirements. It’s an investment that will grow in value and be the starting point for your next home purchase. Choose a home you can afford instead of the luxury model that took your breath away. In addition to your mortgage payment, you will be responsible for property taxes, increased utility bills, insurance, and maintenance. Overextending to buy a home will result in a continual struggle to make ends meet, and you may have to sell it to avoid a foreclosure.
Determine What You Can Afford
If you are not currently living on a budget, it’s time to create one, so you know exactly where you stand financially. Download a budget software to your computer, and start filling in all your necessary living expenses, credit cards, loans, car payment, and discretionary spending. Look for places where you are wasting money, that you could instead be saving towards a down payment. Many people are shocked to discover they spend over $5,000 a year on designer coffee, movies, lunches, and restaurant dinners. Once you’ve completed your monthly budget and allotted a specific amount of savings each month, you will know what you can afford for a mortgage payment.
Check Your Credit Report
Don’t assume your credit report is up to date. Don’t apply for a mortgage loan until you checked your report for errors. Mistakes can cost you in the interest you pay or prevent you from getting the loan you want. You may find incorrect personal information or an old dispute that you need to clear off your report. Once everything is right in your report, start shopping for a home loan.
Get Pre-Approved
Getting pre-approved requires you to complete a mortgage application, and provide the mortgage lender with the necessary documents to obtain your current credit rating and check your financial background. The lender will then be able to give you a specific mortgage amount for which you will be approved. You might even be able to lock in a specific interest rate. Being pre-approved is a huge plus when you are negotiating with a home-seller because they know you can get a mortgage loan.
Don’t Do It Alone
Many first-time buyers think they can find a home online and skip hiring a real estate agent. Doing so can be a costly mistake. A real estate agent takes care of playing phone tag with sellers and making appointments for you to view homes. He or she understands real estate contracts and how to prevent you from losing your deposit if things don’t work out. The art of negotiation is another area of expertise your experienced real estate agent possesses. It is tough for a buyer to negotiate with a seller’s agent who is working for the sole benefit of the home owner. The real estate agent stays abreast in contract law, disclosure, and legal issues. Hire a real estate agent that has experience working with first-time home buyers.
It’s a very good time to buy a new home, and start investing in your future. Following these tips will help your first home purchase go smoothly.