If you’re buying a home for the first time, you have a lot to learn. There are so many decisions that need to be made and new terms to be understood. While you may have been saving up for a downpayment, you’re most likely going to need t finance the majority of the cost of your home. Knowing how to deal with lenders, real estate agents, and other professionals involved in the process of purchasing a home will make your life that much more straightforward. Read on for some mortgage tips that every first-time home buyer should understand.
Know Your Budget
You may find when you apply for a mortgage that you’re able to finance more than you thought you could. Being able to borrow such a significant amount is where many home buyers get caught in a numbers trap. Although the bank may be willing to loan you a certain amount, you might not actually be able to afford it. While the bank looks at many of your financial numbers, the bank doesn’t know your entire budget. How much you spend on groceries each month or the cost of your monthly phone bill are out of the picture when the mortgage company approves you for a loan. Whatever amount of money you borrow to buy your house will result in a monthly payment amount. If you’re only paying $800 per month in rent but your mortgage payment will be $1400, that will result in a significant budget adjustment. Will you be able to come up with the additional $600 each month to pay the mortgage? You need to look at your entire budget seriously to be safe in your mortgage transaction.
Plan For Out Of Pocket Expenses
You know that you need to save for a downpayment on the home of your dreams. What you may not know is that there are many other out of pocket expenses that you need to foot the bill for when you buy a home. These costs include:
Pizza for the people who help you move
Repairs to the home
There are so many expenses that you need to come up with when you buy a home. Don’t merely save enough for your down payment and stop. Make sure you have a financial cushion for emergencies, money to help furnish the house, and more.
Mind Your Credit
When you buy a new home, it may be tempting to buy new furniture, decor, or other items for your property. Hold off on opening any new credit or making large purchases. While a new car will look great in your new driveway, it won’t look so good on your credit score. Be very mindful of your credit score when you are getting ready to buy a home.
You’ve closed on your new house, moved all your boxes, and started planning how to arrange your furniture. Your family can’t wait to settle in and regain a sense of normalcy after the chaos of moving. But before you get back to your normal routine be sure to add these tasks for new homeowners to your to do list. Each takes just an hour of your time and will help you to stay on top of maintenance as well as familiarize yourself with your new domain.
Start by finding out where your main water shutoff valve is located. This is not something you want to have to find when you are in an emergency. In colder climates, it’s most likely to be found in your basement and if you are in a warmer climate you should find it outside. If you keep a binder for home updates add a note of the location within.
Make sure your attic insulation is the correct depth. You want at least 6 inches and even more in northern states. Ensuring that your insulation is the correct depth will help you to save money throughout the year on heating and cooling costs. If you’re attic doesn’t have the correct depth or is damaged be sure to have it replaced as soon as possible. Oftentimes you can get incentives for improving your insulation and thus creating a more energy efficient home.
Check the temperature of your hot water heater and be sure it is set at 120 degrees tops. If you have an older model add a hot water heater blanket to help retain heat. If you find that your heater leaks you want to replace it immediately. A small leak can quickly lead to a major one, flood your home and cause serious damage. Again, be sure to keep note of the month and year you replaced your heater or which year your current model is.
Replace air filters right away so that you will know when they’ve last been replaced. Add monthly reminders to your calendar to stay on top of this quick maintenance task. You can make this task even easier by buying them in bulk. If you love to be organized label them for each month so you know exactly when you’ll next need to replace them.
Change all of the locks on your home. This is simple enough to do on your own and is an easy proactive safety measure for your family. While one hopes there are no lingering keys out in the world of your home, you can’t be sure of who may have a spare key.
Take note of any cracks in your basement. If you find any mark their length with a piece of masking tape and mark with the current date. Watch closely to see if the crack spreads beyond the mark. If you find that the cracks are lengthening be sure to get them taken care of by a professional. This is a serious repair you don’t want to wait on.
Buying a new home is an exciting time. Especially after you’ve closed on the house, can begin to move in and start settling into your routine. Before you get too comfortable be sure to add a few tasks to your to do list. Familiarizing yourself with your new home right away will help you stay on top of maintenance and have peace of mind.
When you decide to make an offer on a home, your mind may be flooded with dozens of questions and concerns -- several of which may involve money matters, while others are about the condition of the house.
However, if you've had the house professionally inspected and made sure your income is sufficient to absorb monthly expenses, than you've already taken steps to prevent or at least minimize future challenges.
Since buying a home is such a big investment and there are so many emotional factors that could influence your decision, it's essential to stay focused, adhere to a budget, and be aware of what you need in order to be satisfied with your purchase.
The Financial Side of Things: Even though a mortgage broker or loan officer may approve you for a large mortgage, only you can determine whether you'd be comfortable making those monthly payments. In addition to the cost of your mortgage, property taxes, and school taxes, there are also other expenses to consider and include in the equation. If you're moving into a larger house, for example, the cost of heating and/or cooling your home may be higher than you're used to. Poorly insulated houses can also have a negative impact on home energy costs.
Another key factor to think about when you're figuring out the affordability of a potential new home is property maintenance, the cost of HVAC service, and miscellaneous expenses, such as appliance repairs, plumbing leaks, and electrical services. Some neighborhoods, residential developments, and condos also require a monthly Homeowner Association (HOA) fee, which can potentially put a burden on your cash flow situation. A good rule of thumb, of course, is to avoid spending beyond your means. While nobody would dispute the logic of that advice, it's often a lot easier said than done -- especially on an ongoing, consistent basis.
Non-Financial Priorities: The only way to know what you truly want and need in a new home is to clarify your goals, requirements, and wishes. Making lists, discussing it with your partner, and visiting lots of homes for sale will help give you the ideas, the inspiration, and helpful points of comparison you need. Online real estate listings and home improvement websites can also provide a wealth of practical ideas.
In addition to having enough bedrooms and bathrooms to meet your family's needs, it's also important to feel comfortable with the quality of the school district, the amount of noise in the neighborhood, and the traffic level on nearby streets. Proximity to recreation, shopping, and other amenities can also make the difference between your ideal home and one which doesn't quite make the grade. Privacy (or the lack, thereof) is also a major issue which can impact your satisfaction with a real estate purchase. While it's good to approach home buying with a sense of optimism, the best time to weigh all the pros and cons is before you sign the final papers at the closing table!
For first-time homebuyers, going from property buyer to property owner may seem virtually impossible. Lucky for you, we're here to help you take the guesswork out of buying a home.
Now, let's take a look at three questions that every first-time homebuyer needs to consider:
1. What is my "dream" residence?
One first-time homebuyer's definition of a "dream" residence may differ from another's. As such, you should consider what you'd like to find in a dream house before you begin your real estate search.
Creating a checklist of "must-haves" and "wants" in your house often serves as a great starting point for first-time homebuyers. This checklist will enable homebuyers to consider what they'd like to find in a dream home and plan accordingly.
Also, it is important to establish realistic expectations before you kick off a home search.
Many terrific houses are available in cities and towns nationwide, but no home is likely to have every feature that you desire in a dream residence.
Therefore, if you establish realistic expectations for your home search, you can avoid potential let-downs as you explore a broad array of high-quality houses.
2. How will I pay for a home?
Getting pre-approved for a mortgage is vital for a first-time homebuyer, and for good reason. With pre-approval for a mortgage, you'll know what you can afford to spend on a home before you enter the real estate market.
Many banks and credit unions are happy to meet with you to discuss your mortgage options. These lenders can outline the differences between adjustable- and fixed-rate mortgages, help you assess your credit score and ensure you can make an informed mortgage decision.
Furthermore, lenders can answer any mortgage questions that you may have. They can help you evaluate your current financial situation and enable you to obtain a mortgage that won't force you to revamp your day-to-day budget.
3. How do I begin searching for a house?
Beginning a home search is easy, particularly for first-time homebuyers who work with expert real estate agents.
An expert real estate agent understands what it takes to find a wonderful house at a budget-friendly price. In fact, he or she will do everything possible to help you navigate the housing market quickly and effortlessly.
Typically, an expert real estate agent will keep you up to date about new homes as they become available, set up home showings and submit home offers on your behalf. This housing market professional also will offer honest, unbiased recommendations throughout the homebuying journey to help you select a house that matches or exceeds your expectations.
When it comes to exploring the housing market, there is no need to work alone. Fortunately, you can hire an expert real estate agent who can help you get the best results possible during the homebuying journey.
Want to acquire your first home? Use the aforementioned tips, and you can move one step closer to owning a top-notch house.