Did you know most Americans don’t have enough money to cover a 1000 dollar emergency?
Before buying a home, you’ll want to have an emergency fund saved. If you want some more first time homeowner tips, we can help.
In this guide, we’ll go over how to become a first time homeowner.
Want to learn more about buying a new home? Keep reading to make a smart decision as an aspiring first time homeowner.
1. Save for an Emergency and Pay off Debt
Owning a home can get expensive and is more pricey than renting. When you own a home, upkeep and maintenance costs add up fast.
Before buying a home, work hard to become debt-free. Set aside an emergency fund of six months’ expenses. If you have some extra resources, consider investment opportunities.
Stay debt-free as well. Think about your budget when you’re shopping for a home. Instead of filling your home with brand new furniture, shop second-hand.
2. Look for a Reputable Real Estate Agent
You’ll want to ask your network if they can recommend any local real estate agents.
A decent agent will look through the market for a home that meets your needs. Your agent will also help you with the negotiation and closing process.
Chat to a couple of agents before deciding. Ask the agent about their experience helping first time home buyers.
3. Get Pre-Approved for a Mortgage
Buyers will go out shopping for a home with a pre-approval from an online calculator. Instead, you’ll want to work with a lender. The lender will consider your income, your credit score, and your down payment.
You may get a preapproved to buy a home, but not for the house you want. Before you move forward with your mortgage funds, the lender has to approve the deal.
If you’re serious about a home and want to make an offer, ask the lender for a mortgage preapproval and run the numbers in detail. This way, you can confirm what you can spend on a home or property.
If the lender doesn’t feel the property is worth the price you want to pay, they’ll decline.
4. Don’t Forget About the Hidden Costs
A first-time buyer will have a smaller down payment most of the time. When getting into a home, you may feel as if your finances are stretching thin. Yet, you will need a bit of wiggle room when buying your first home.
A house will develop issues over time. You’ll have to deal with maintenance, repairs, breaks, and leaks.
Ensure you have resources available that will cover the extra costs that come when you buy a home.
You’ll want to have savings set aside or wiggle room from your income each month to handle unexpected expenses. You’ll pay for property taxes and regular repairs and maintenance.
If you can only meet the minimum down payment and mortgage payments, you’ll need to wait. You need room in your budget before you buy a home.
5. Don’t Rush the Process
Sometimes, first time home buyers will feel as if they need to buy right away. Don’t get motivated by fear that you’ll get shut out of the market.
Some homebuyers will buy a house at the top of the market with their minimum down payment. Yet, you don’t want to rush into buying a home when you have thin margins with your finances.
6. What Are Your Future Plans?
When shopping for a home, you’ll want to think about where you’ll be in the next five years. Do you plan to have kids?
How will you fit in daycare payments or a lost income if you stay at home? Are your career and income fairly stable? Consider if the commute is long.
When you shop around for a home, you’ll also want to consider future renovations.
Will you renovate the kitchen if you dislike the current one? Can you live in an unrenovated kitchen until you can save some money to renovate?
7. Set Aside Funds for Closing Costs
You’ll need to pay for closing costs alongside your down payment. On average, closing costs could be about three to four percent of the value of your home.
Your lender will provide you with a number, so you know what you’ll need for closing day.
The fees include your home inspection, appraisal, homeowner’s insurance, and an attorney.
8. Consider the Neighborhood
Once you find a home, make sure you don’t only consider the property alone. Ask your agent for information about the quality of schools in your neighborhood.
Is there a lot of traffic? You could even drive to the district at various times of the day to check the traffic conditions. Choose a neighborhood where you and your family feel comfortable.
9. Look Into Home Buyer Assistance Programs
Most states and counties will offer first time home buyer programs. The program will combine closing cost assistance, down payment assistance, and low-interest-rate mortgages.
You can also get a tax credit through some of the programs.
10. Stay on a Budget
A lender could offer you a loan that’s more than what you can afford. You might feel pressure to spend more to beat another buyer’s offer.
To avoid stress down the road, stick to a price range that’s based on your home buying budget.
Now You Know Some Tips as a First Time Homeowner
We hope this guide on buying a house as a first time homeowner was helpful.
Save money for home closing expenses, mortgage interest, and future maintenance jobs or emergencies. Consider the neighborhood and commute as well when searching for your first home.
Keep browsing our other helpful resources on advertising, marketing, and more. Visit the Real Estate section of the Everything Entrepreneur Blog to learn more about first time home ownership, mortgages, and property management.