9 Tips for First-Time Homebuyers:

Start Saving

The home buying process is not cheap. You’ll need to save up for a down payment, closing costs, and even move-in expenses. Down payment requirements will depend on the type of mortgage you choose and the lender. Some loans directed toward first-time home buyers with good credit allow as little as 3% down. But even a down payment isn’t something to brush off. These payments are a small percentage of the house’s value but a large number that you’ll need to still save for. If you’re able to get 3% down for a $400,000 property you’ll still have to pay $12,000. Closing costs are the fees and expenses you pay to finalize your mortgage, and typically range around and between 2% to 5% of the loan amount. Move-in expenses can mean anything from repairs to upgrades. Make sure to save up some cash so you can make any changes to your new home!

Track your Credit Score

Your credit score will determine whether you can qualify for a mortgage or not. Strengthening your credit might be the most important step in the home buying process. Easy things to do to improve your credit score are paying bills on time, keeping credit card balances as low as possible, and keeping all credit cards open. You can get free copies of your credit reports from Experian, Equifax, or TransUnion. Make sure to track your credit score weekly and don’t be afraid to discuss anything that might hurt your score.

Get Pre-Approved

It’s a really good idea to get a mortgage pre-approval before you begin comparing properties. The first steps to this process is getting your pre-qualification letter and pre-approval letter. The pre-qualification letter is an estimate of the amount of home loan you can get. The pre-approval letter is an official document from a lender that tells you exactly how much loan money you can get based on your financial information. Getting pre-approved comes with many benefits. You’ll know exactly how much you can afford, there will be less surprises during your home buying process, and you can make a much stronger offer.

Set and Stick to your Budget

Figure out how much you can spend on a house before starting to shop around. Your budget should be a big priority, take some time to figure out what price range is going to work for you. A lender could offer more than what is comfortably affordable for you, or you could feel pressured to spend outside your budget to beat another offer. To avoid financial stress in the future, set a price range based on your budget, and stick to it. You should also look at properties below your price limit to give you some room for bidding in a competitive market.

Explore Loan Options

One absolute necessity during the home buying process is deciding what mortgage option is best for you. Some main categories of mortgages to look into are conventional mortgages, FHA loans, USDA loans, and VA loans. Conventional mortgages are not guaranteed by the government and are targeted at first-time buyers requiring as little as 3% down. FHA loans are insured by the Federal Housing Administration and allow down payments as low as 3.5%. USDA loans are guaranteed by the U.S. Department of Agriculture and usually require no down payment. VA loans are guaranteed by the Department of Veterans Affairs for current and veteran military service members and usually require no down payment as well.

Find a Real Estate Agent

A good real estate agent will investigate the market for homes that check your boxes and help guide you through the negotiation and closing process. Remember to interview any agents you’re interested in before making a decision. When speaking with a potential agent, ask about their experience helping first-time home buyers and how exactly they will help you through the process. Remember that only a buyer’s agent will work for you and care about your needs. Don’t expect the seller’s agent to represent your best interests whatsoever.

Pick Out What you Want and Where

The reason for buying a home will be your guide for making decisions regarding your purchase. Once you’ve decided on what type of home you want, you can start prioritizing features that meet your needs. Maybe you want to focus on finding a home with extra bedrooms for future children. If you have a pet that needs a place to get its energy out, finding a home with a big yard or a location near plenty of green spaces would be in your best interest. Create a list of qualities you want and need in your home to make the whole process more effective and less stressful.

Get an Inspection

A home inspection is an intensive assessment of the structure and mechanical systems of the home. Inspectors look for any potential problems so that you can make a decision about buying the property. You need to understand what’s included in the inspection and make sure everything is being looked at that needs to be. Make sure the inspector gets to every part of the house including the roof and any crawl spaces. Most of the time the buyer attends the inspection, and you always should. Following the inspector around allows you to get a better understanding of the property and ask any questions you may have. If you can’t make the inspection, thoroughly review the inspector’s report and ask about anything that doesn’t make sense.

Negotiate!

Always, always, always negotiate. One way you may be able to save some money is by asking the seller to pay for any repairs in advance or lower the price of the home to cover the cost of those repairs you may need to make. You can also ask the seller to pay for some of the closing costs. Your negotiating power will also depend on what’s going on in the market you’re looking to buy in. It’s harder to drive a bargain when there are more buyers than homes for sale. Your real estate agent will be able to help by understanding the market and strategizing accordingly.