Ten Tips To Buy
So you’ve decided to leave the renter’s life behind and become a homeowner. Congrats! With all the benefits homeownership brings — like space, privacy, and freedom — it’s one of the most exciting transitions you can make. It’s also one of your largest financial investments, so creating a solid plan now can help you save time and money in the future.
We’re here to provide all the tips and tricks for first time homebuyers to get started. There are a few key questions you’ll want to ask yourself to create the foundation for your plan:
- How is your financial health? Lenders use your credit history to help determine the risk of giving you a loan, as well as the terms and conditions of the loans they’ll offer. Assessing your financial health can help you make a realistic plan, and make adjustments when necessary.
- What type of home suits your needs? Now is the time to sort out your wants and needs for your new home. Having clarity on what you’re looking for can make your search more efficient.
- Are you pre-approved? If so, for how much? A mortgage pre-approval is a vote of confidence from a lender that you can make the necessary down payment and have the income to cover future payments. A pre-approval can help you shop for homes within your means.
- Who is going to help you? Will you be buying a home with your partner? Will a friend or family member be contributing to your down payment? Have you found a local mortgage broker yet? Organizing this ahead of time can help you reach your goal faster.
Once you’ve answered these questions for yourself, use these tips for first-time homebuyers to make your transition to ownership smoother.
Start saving now
If you have direct deposit through your employer, consider putting part of your paycheck directly into your savings account. Or, set up an automatic transfer from your checking account to your savings account every time you’re paid. Find ways to reduce spending, too. Skip the coffee shop. Eat out less. Shop sales.
Know your down payment options
Many home buyers believe that 20% down is the only way to go. However, there are many lenders that allow a smaller down payment than that – as little as 3%. A local mortgage broker can discuss your options.
Find your perfect neighborhood
Is it close to the conveniences you need (stores, parks)? Are the schools highly rated? Is it a low-crime area? All this can affect your home’s value down the road. Remember, you can always make changes to your house, but you can’t change its location.
Scour open houses
This is a great way to get a real feel for the neighborhood – and your potential neighbors!
Don't sweat the small stuff
Prefer hardwood over carpet? Hate the color of the front door? Don’t let it be a deal-breaker. These cosmetic items are relatively easy to fix and allow you to put your personal stamp on the home.
Don't be afraid to negotiate
Some sellers are really motivated to sell, and you can use this to your advantage. From much-needed home repairs to closing costs, you are fully within your rights to ask the seller to help pay for them. And if they’re anxious to get their house off the market, they just may say yes.
Start a Home DÉcor fund
Designing your living space is one of the best parts of home ownership. But filling your home with furniture and other items may be financially challenging. Try starting a separate fund designated for new furniture, art and other things that help turn your house into your home.
BE PRESENT AT YOUR HOME INSPECTION
Make sure every space in your future home is accessible and thoroughly evaluated. Don’t be afraid to ask your inspector to check\ for additional things that may not be on their list (pests, radon, mold, etc.). This is a place you’re planning to call home – it’s up to you to ensure everything checks out.
DON'T FORGET ABOUT CLOSING COSTS
Your down payment isn’t the only money you need up front. You’ll also have to budget for closing costs, which typically run from 2%-5% of your loan amount. Your seller may agree to pay all or some of the costs to move their house to sold status. Find a local mortgage broker who can help negotiate on your behalf.
KEEP YOUR FINANCES CONSISTENT
Lenders like to see consistency when you apply for a mortgage. So to help ensure a smooth application review, don’t make any major purchases, don’t change or quit your job, and don’t withdraw or deposit large amounts of money in or out of your bank account. Your mortgage broker can give you more tips.