Getting ready to buy a house is an exciting milestone to reach in life. From researching cool neighborhoods and school districts to picking out paint colors and dreaming up your dream kitchen, there’s a lot to look forward to as you go through the homebuying process.
But with all of the exciting moments, there are some less desirable steps to take as well, like, crunching numbers on a mortgage and assessing closing costs.
Nonetheless, buying a house can be made simple with some easy to follow guidelines. In this post, we’ll be taking a look at five tips for homebuyers who are new to the market. Follow along to learn more!
1. Sort out your savings ahead of time
There are a few reasons why buying a home is an exciting step to take. For one, it shows a certain level of maturity and self-assuredness that you’re ready to settle down somewhere or financially-commit to a big investment.
Secondly, it signifies that you’re willing and ready to take on the financial aspects associated with becoming a homeowner, like a mortgage, property taxes, and of course, putting down a down payment.
Your down payment is an important part of the homebuying process because it plays into your loan eligibility and takes away from the amount that you’ll owe on your mortgage.
The recommended down payment on a house is approximately 20%. This amount allows you the option to reject mortgage insurance and it’s a number that experts agree generally works within 15 and 30-year mortgage timelines.
Whether you’re looking to buy a big mansion or a humble bungalow, saving up enough money for a down payment can take years to do. That’s why it’s worth it to build your savings ahead of time, even if you don’t plan on buying property in the immediate future.
Check out this post to learn how to reach your financial goals to help you get started!
2. Review your real estate investment plans
Taking risks is the name of the game when it comes to making investments, but you can (and should) still calculate your strategy before diving in too deep. Especially when it comes to real estate investment.
Now, there are lots of metrics to consider as you review your investment strategy, but the most important is to calculate investment return potential.
This equation will give you a good idea of whether or not your investment will save or lose you money, and if so, how much. However, it’s important to keep in mind that the real estate world can be pretty unpredictable so do your best not to paint an overly rosy picture that will skew your results.
3. Work on your credit score before applying for a loan
When you apply for most any line of credit, a lender will take a look at your credit score and will then approve or deny your application based on this and a few other factors.
Generally, homebuyers with higher credit scores are not only approved at a higher rate, but they also tend to get approved for mortgages with lower interest rates, saving them countless dollars in the long run.
As you get ready to begin the buying process, start by assessing your credit score first. If it could be in better shape, take some time to tackle your debt and rectify any other issues before moving forward.
4. Approach open houses strategically
One of the most fun parts of the homebuying process for many people is the opportunity to tour homes that you’re interested in. Not only do you get to visualize yourself making a life for yourself in that space, but you can also learn about the home’s history, amenities, neighborhood, and of course, any potential red flags that may impact your decision.
As you attend open houses, you’ll want to pay close attention to the fine details and ask questions like:
- How many offers have already been made?
- Has the asking price changed since the property was first listed?
- Why do the sellers want to move?
- Are there any issues with the home currently?
- What is the average cost of utilities?
5. Don’t skip the home inspection
When you’re ready to seal the deal on the home of your dreams, you won’t want to skip this (almost) final step: home inspection. A professional home inspector can detect a variety of unseen issues that may cost you time, money, and headaches later on. Plus, it’s your right as a buyer to hire one!
Moreover, during a home inspection, you can determine if any of the appliances or systems in the property need repairing or replacing. Accordingly, this is when investing in a home warranty plan can help you to cover these costs at a fraction of the price. If you would like to learn more about home warranty plans, you can check here to discover some helpful resources on the First American website.
Are you ready to start shopping for your home? Feel free to use these tips and share with others.
