Buying your first home is a very exciting accomplishment. However, buying your first home can also be a very challenging process as well, so here are some tips to help guide you through the obstacles of first time home buying.
Sellers usually won’t accept your offer unless there is proof that you are serious about the offer and, more importantly, that you will be able to get financing to go through with the deal. This is why it is very important to apply for a pre-qualification with a lender.
Since a pre-qualification covers only the most basic review of your finances and, is in fact, the most basic form of approval. Pre-qualification states that after a basic and a quick review of some of your finances, the lender would consider approving you for a loan. It is better to get a pre-approval, which states that the lender will, most likely, approve a loan for you at a specific amount.
Zero in on a location
Every town has benefits and drawbacks. However, you should try to zero in on one location that works best for you and then pursue homes in that area. Otherwise, you will wind up with too many options, which will only create more stress than necessary, which will lead to making a bad decision.
Find a neighborhood that is located close to where you work, has a good school system and offers some of the amenities that you require and want. This way you will already be in the area that works for you and you can then focus on finding a home that appeals to your needs and wants.
Prioritize your preferences
Make a list of what’s important to you and your family in a home. Some ideas would include location, condition, price or other specific amenities. Since you won’t get everything you want in a home, be prepared to make some sacrifices along the way.
However, if you make a list of priorities it will be easier to focus on the options you just won’t sacrifice and you will have an idea of what options aren’t that important to you that you could live without to gain options you truly want.
Understand your budget
Before you start house hunting, make sure you have a well-defined budget that lists exactly how much you can borrow and the monthly payments you can handle. With an investment as important as buying your first home, you can’t afford to not have a firm understanding of what you will be able to afford.
Once the papers are signed and you move in, there really is no going back, so it is very important to come up with an honest and realistic budget before you even start looking for a new home.
This one goes hand in hand with understanding your budget. If you are approved for $200,000 don’t go looking for a home that costs more than that. Most sellers will receive several offers equal to or higher than their asking price. You are only setting yourself up for disappointment if you make an offer on a home that costs more than you’ve been pre-approved for. Why set yourself up for failure, it only brings down your morale.
Don’t drag your feet
Because of limited inventories, homes can sell quickly. Check out newly listed properties, that interest you, as soon as possible. This doesn’t mean you should rush into any deals, this only means, when you are looking for a new home focus on that task and see it through as you would any other job. Getting your finances in order first with a budget and getting pre-approved helps to play a major role in preparing yourself for home hunting.
Don’t play games when making an offer
Some first-time homebuyers will offer the seller a higher price to beat out other offers. Then they will try to recoup the difference in price with seller-paid closing costs, repair credits and other concessions.
This isn’t a very smart tactic because if the appraisal doesn’t support that higher offer, you won’t be able to find a lender who will finance it anyway. It is better to do your homework and research the property completely, then offer a fair price for the condition of the property.
Pay closing costs
If you ask a seller to pay your closing cost, it only weakens your offer and lessens your chances of gaining the property. A seller only cares about how much they will receive for the home if you ask them to pay all or part of your closing costs, that is money being subtracted from the total amount they receive for the home and will, most likely end with the seller taking someone else’s offer instead of yours.
Don’t expect perfection
This is along the same lines as asking the seller to pay for repairs, unless you are applying for an FHA loan or a VA loan, the property may not be perfect, but still in good shape and with a little work it may be perfect and suitable to your taste. If you are going with either of the loans mentioned and their safety concerns or missing appliances, there is no choice but to replace them. However, if you are working with a different loan option, take into consideration what the defects of the property are and weigh them against the price you will pay to see if the asking price is still a good deal.
Do your homework
You can gain an advantage over experienced buyers who are out of touch with the trends by being well-informed about the local housing market. Do your research in the area that you want to buy a house in. Be thorough and look into all of the trends over the past few years. A little bit of knowledge and preparation will go a very long way to getting you the house you want for a price you can afford.
The bottom line is, purchasing a house today isn’t easy. It’s a challenge, to say the least, especially for first-time homebuyers. However, if you follow these simple tips, you’ll have a greater chance of securing the home you want at a price and terms you can live with.
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