Buying a home is a big deal. It will very possibly be the single most expensive purchase you will ever make. A mortgage or home loan will be part of your life for many years. First-time home buyers should have all the necessary information before deciding to buy a house and taking out a mortgage. Few people are able to buy a home cash and forego the option of a mortgage. So, to help you out, we would like to share some vital advice with first-time home buyers.
Tip 1: Consult the Experts
Your first step should be to find a real estate agent and mortgage broker and ask them all the questions you have. This should happen before you even start looking at houses. Find out how the process works, what will be expected of you, how the size of your mortgage will be determined, what is available on the housing market, etc. Information is your best friend when you embark on a new adventure. This adventure will cost a lot of money so it’s best that you know as much as possible beforehand.
Tip 2: Look at Different Options
This refers to both mortgage options and house options. Don’t get stuck on one or one neighborhood. Do some online scouting and find homes that you like in a few neighborhoods you would like to live in. Drive around these neighborhoods and see of any FOR SALE signs pop up. Hire a good real estate agent to help you narrow down your options.
In terms of the mortgage loan, weigh your options. Ask different financial providers like banks and credit unions what their rates are and what their requirements are for a loan application. Compare the different options to find the best solution for you and your budget.
Tip 3: Draw Up a Cashflow Chart and Budget
You don’t want to go into buying a home and applying for a mortgage loan without knowing what you can afford and are willing to pay. You should sit and evaluate your income, your cash flow, your expenditures, and any room for improvement to be able to afford to take on a mortgage. Ask your accountant or broker for help to devise the best financial plan to buy your dream home and still be able to pay all the bills.
Tip 4: Start Saving Early On and Continue to Do So
The moment you start thinking you may want to buy a home should be the moment you start saving. Being able to put down a big enough down payment on your home will give you better rates, lower repayments, and possibly get you pre-approved for a mortgage loan. Saving enough for a down payment will definitely help your case and reduce the stress of a large mortgage.
When are approved for the mortgage loan you should still continue saving. These savings can help you pay more on your mortgage payments every few months. It will also be handy when home emergencies happen, which they will. Roof replacement, burst pipes, storm damage, etc. all happen when you least expect it. So rather be prepared.
Tip 5: Know Everything About Your New Potential Home
To save yourself from unexpected financial and other surprises in the future, know everything you can about the property or properties that you are considering. Find out about levies, transfer cost, property tax, hidden costs, etc. You don’t want these things popping up unexpectedly once you have already signed the papers.
Another important part of avoiding unexpected costs is getting the home appraised. This can happen before you sign any papers or during escrow. Hire a professional appraiser that can look at the condition of electrical wiring, the roof, the foundation, pest problems, water supply, flooring, etc. If the appraiser picks up any problems that the current owners did not know about or did not mention, you can withdraw your offer or just walk away. Sometimes the owners may be open to negotiation and may take on the costs to fix what is wrong. This is not a guarantee, however. So, the best advice we have is to get everything checked and asked a lot of questions beforehand.
Tip 6: Don’t Buy More House than You Can Afford
New home buyers can sometimes buy a home that costs more than they were prepared to pay or able to pay simply because it’s a bargain. This is not necessarily a good plan. The size of the house doesn’t influence your ability to pay off your mortgage, the cost does. The first three tips should have given you a good idea of what amount you can afford to pay monthly. You can use online calculators to determine the overall cost of a home that you can afford based on the monthly payments that are within your financial capability.
Don’t get trapped in any special offers or marketing gimmicks. With a purchase like a home, you want to stick with what you know you can afford. Buy within your means and keep yourself financially safe.
Tip 7: Pay More Than the Minimum
This is advice we give for the repayment of any loan. If you round up your minimum payment or just add on a few dollars every month you will pay off your mortgage loan faster. Every little bit helps from $10 to $1000. No matter how little you can add, it will all add up in the end.
Buying a house for the first time or any time after that is a big deal. A mortgage is a serious undertaking and you should go in with all the information you can possibly gather. The better prepared you are and the better you understand the process and requirements that go with mortgage loans the better off you will be. Avoid unnecessary surprises and hidden costs by following our simple tips.