Thinking about buying your first home? It can be exciting, and it can be daunting at the same time. It’s a major decision, though, and should not be rushed into. Too many first-time home buyers end up learning lessons the hard way, and the 10 tips that follow can help ensure that you can avoid those pitfalls.
Your Credit Matters
This is probably one of the most often cited pieces of advice for first-time home buyers, but it’s so important that it bears repeating yet again. Your credit matters a great deal. If your credit isn’t great, take the time to improve it before you even start looking for a home.
Pay for a Home Inspection
Never take a seller’s word for it when it comes to the condition of the home. Pay for a professional home inspection, and make sure the inspector checks things like the HVAC system, the roof, the windows, the foundation and more.
Know What You Can Afford
Long before you start looking at homes, know exactly how much home you can afford now. A mortgage calculator can help here. You should also determine what would happen if either you or your significant other were out of work for a period – would you still be able to make that payment every month?
Save for Your Down Payment
You’ll need a down payment on that home. There are options that allow you to put down less than 20% of the cost of the home, but even a lower down payment can be a significant chunk of change. You can add to your down payment in many ways, including using your tax returns, or creating a savings plan to get you there.
Make Sure You Budget for Closing Costs
Closing costs run between 2% and 5% of the total loan amount, and usually need to be paid for out of your own pocket. Budget for those costs so that you have the money on hand when you find your dream home. You can sometimes offset closing costs by getting the seller to pay a portion of them.
Research the Neighborhood Thoroughly
Sure, you want to buy the perfect house, but don’t neglect the neighborhood. What’s the projected future growth like? What about HOA requirements and dues? How much will you spend in gas to commute to work from that area?
Set Money Aside for Repairs
In most instances, an existing home (not new construction) will have problems that you’ll need to pay to fix once you own the home. Make sure you know what those problems are, and that you have cash on hand to pay for the repairs.
Pay for a Land Survey
Property lines have a way of changing, at least in the mind of a previous property owner. Before you decide to buy a home, pay for a land survey to ensure that you know exactly where the boundaries lie.
Know Which Mortgage Option Works for You
There are quite a few different mortgage options available, and they’re not all created equal. Will a traditional fixed rate, 30-year mortgage be the best fit? What about an adjustable rate mortgage? Something else? Compare your options so you get the right mix of features and benefits.
Consider DIY Upgrades
If you want to save some money but still get a home you’ll love, consider buying a fixer-upper that you can improve on your own. Many improvements can be done by you and your family, including installing sheetrock, painting, even building decks.
By keeping these tips in mind, you’ll have a simpler time of it when it comes to buying a home that you’ll love.