It’s about that time, isn’t it? Paying rent every month for an apartment you don’t own is finally getting to you. Or are your parents telling you it’s time to move out and get your own place? Do you need extra space for your dogs? No matter the reason, buying a home for the first time can be an overwhelming experience if you don’t know what you’re doing. That’s not you though. One way or another, your extensive research on the home buying process has brought you here, so you’re on the right path. You’ll be ready to make a final decision on a home in no time, but first, here are eight things every first-time home buyer need to know before they get started.
Eight things first-time home buyers need to know before they start shopping.
1. YOUR CREDIT SCORE
This may sound like a no-brainer, but you’d be surprised at how many people don’t know their credit score or haven’t even thought to look at it. If you’re one of those people, stop reading, open up a new tab, and do some research on what goes into a credit score, what affects it, how to obtain it before you read any further. Your credit score can make or break your chances of getting a mortgage depending on how high or low it is, but there are ways to improve it if you find your score needs some work. While there’s no set credit score that you need to buy a home, it’s better to be safe than sorry. Be sure to clear any inaccuracies or bad debt before you apply for a mortgage.
2. YOUR LOAN OPTIONS
Once you know your credit score, you should have a much better idea of which loan options would be available to you. Most lenders will have a general overview of their loan products on their website with a target credit score. But depending on whom you choose, there could be some wiggle room there. Don’t stop at skimming through a website. Check out our blog for an in-depth rundown of the different types of mortgages and how they may fit your needs. If you’re serious about buying a house, get in touch with a loan officer and find out where you stand.
3. LOCATION VS. SPACE
As a first-time home buyer, there are a lot of options and factors you’ll have to weigh. Two of the most important are location and space. Depending on where you are in life, you may have different priorities where it concerns these two factors. If you’re single, you may want to prioritize location above everything else. If you’re moving with a family, space might be more important than being in a happening part of town. It’s important to have clear priorities so you don’t give up too much of what you’re looking for throughout the house-hunting process.
4. SAVING FOR A DOWN PAYMENT IS A GOOD INVESTMENT
If you’re ever caught between saving for a down payment or putting those savings toward an investment opportunity, remember that you won’t lose money investing in your home. Many people choose loans that either don’t require money down or require a very low percentage. Then, they end up losing money by trying to invest in something other than their home. A substantial down payment goes a long way in minimizing risk and getting you started off on the right foot with some equity. Make sure to start saving as soon as possible to make a sizable dent in your total home cost.
5. GOOD REAL ESTATE AGENT MAKES ALL THE DIFFERENCE
If it’s your first time buying a home, you’re going to want some help. A great real estate agent can take a lot of pressure off you and really help streamline the process. Find someone who comes highly recommended, either from a friend, family member, neighbor, or co-worker, and let them work for you. The right agent should be experienced, skilled, motivated, and knowledgeable about the area in which you want to buy.
6. SCHOOL DISTRICT MATTERS
Even if you don’t have kids, you should always check out a potential neighborhood’s school district before buying a home. That’s because living in an area with good schools can raise your property value. And when it comes time to sell, people with families will be chomping at the bit to buy your home.
7. DON’T JUMP UNTIL YOU ARE READY
Buying a home isn’t a process that should be rushed. It’s a huge commitment, more expensive than people realize, and not one that should be taken lightly. Before you buy a home, make sure you know exactly what you’re getting into so you can decide if you’re ready from a financial and personal standpoint. Find out how much you’ll be paying in addition to your monthly mortgage payment. That includes property taxes, homeowners insurance, HOA fees, and other monthly costs. Once you have all that settled, you’ll be in a good position to decide if you’re ready or not.
8. STICK TO YOUR BUDGET
That’s what it’s for, right? Look for properties that cost less than the amount you were approved for initially. Even though you can technically afford your pre-approval amount, you should use that as a ceiling. That’s because it doesn’t account for the monthly expenses we listed earlier or any other repair costs that may arise during homeownership.