So far this year, mortgage rates continue to hover around 3%, encouraging many hopeful homebuyers to enter the housing market. However, there’s a good chance rates will increase later this
What to Know as a First-Time Home Buyer
Being a first-time homebuyer is not an easy venture. When you are buying a home for the first time, there are plenty of decisions to make and some details are often overlooked due to inexperience.
There are a number of things first-time homebuyers wish they knew. Instead of letting your introduction to the real estate market end with regrets, read on for some informational tips on what to expect when buying your first home.
Know Exactly How Much House You Need
It’s easy to get carried away with your home search. With all the options there are to consider, your head might start spinning — How many bedrooms will you need? Will one bathroom be enough? How big of a yard do you want to maintain?
Rather than winging it and hoping you end up with the right home, take a personal inventory of what you want in a home for the next five years. If you’re single, you may not need as much space as a small family. If you’re a newlywed couple with children on the horizon, having some extra room may be an asset in the years to come.
Remember, you’ll likely own the home for several years so even if you think you may have forgotten some things on your checklist, there’s usually another way to make your homework for you. For example, if you run out of room on the main floors, there’s always the opportunity to use the basement if you have one.
Many homes, both old and new, typically have unfinished cellars, leaving essentially a blank canvas. That being said, it’s a smart idea to look into different ways to renovate your basement that will both increase and provide useful space. From a home office to a gym or even a rental suite to offset the cost of homeownership, do your research so you can decide exactly what is right for you or for your family.
Hiring A Moving Service Makes Things A Lot Easier
After you assess your budget, what’s leftover? If there’s a little wiggle room, you may benefit from hiring a moving service.
Or, if you prefer to DIY, make sure you rent a truck to help transport all your belongings. Before you start loading up your home, choose a truck in the right size to curb costs, and deliver the best value to your needs. U-Haul is a highly regarded company worth looking into but you can also choose from any one of these highly regarded moving truck companies.
Also, make sure you determine how far you will be traveling to allocate the proper funds needed for the move itself.
Finally, determine if moving insurance is in your budget as well. Moving insurance safeguards you from being responsible for any damage that may happen to the truck, your belongings, or even liability. This can be particularly useful if you are making a long move, like across the country. Seeing as moving trucks can cost upwards of $45,000, this is a helpful add-on to keep in mind.
Assess Your Budget And Stick To It
Budgeting is a key resource to you as a first-time buyer. Even before you buy the home, you have to consider down payments, mortgage loans, and closing costs. Saving up money and learning how much house you can actually afford will help you judge exactly what you should be looking for. Getting a pre-approval is a key component before starting your home search.
When looking for a mortgage loan, your credit score and debt-to-income ratio will be key determinants of just how much you can get approved for. The average credit score in the United States is 682, but most loans will accept a score above 580. As you can see getting a mortgage with less than outstanding credit is still possible.
Your debt-to-income ratio is calculated by how much debt you currently have and how much you make on a monthly basis. Each of these provides a clear sign to lenders as to the type of borrower you will be, so the better each of these scores is, the more money you will have to spend.
It’s important to note that having enough money to not only buy a home but also fund all of the associated costs is essential even after you’ve bought the home. Utility expenses or unforeseen home repairs in the future can rack up a hefty bill.
Hire A Real Estate Agent
A Realtor knows the ins and outs of all things home buying. From who to get a home inspection from to how much homes are averaging for in a certain neighborhood, their expertise can bring your house hunt a long way. When looking for a Realtor, there are several things you’ll want to think about.
First things first, you should be dealing with someone you feel comfortable disclosing personal details with. Whether it’s a family friend or someone that has been recommended to you, your Realtor will have to know sensitive financial information like how much debt you owe and your monthly income.
Luckily, there are plenty of things you can do to make yourself more secure with your real estate agent. The first is understanding their role in your house hunt. Many Realtors are paid on commission, meaning they don’t receive a penny until you buy a home. In most cases, this ensures that you receive quality service and a dedicated aid during the home buying process.
Also, make sure your expectations for your Realtor are known from the get-go. Some things you should discuss include transportation to and from open houses, how you would like to be contacted on a day to day basis, and setting realistic goals or timelines. Perhaps most importantly though, if you’re unhappy with your Realtor’s work or conduct, don’t be afraid to say so. Keeping an open and honest line of communication with your real estate agent is vital for succeeding in the market.
Final Thoughts on Buying Your First Home
Buying a home is one of the biggest purchases many people make in their entire lives. While it’s easy to get caught up in all the mistakes that can be made during the home buying process, reveling in all the successes is a lot more fun!
About the author: The above article on things a first-time home buyer should know was written by Jeannette. Jeanette is a professional writer who loves writing about all things real estate and finance.