Buying a home for the first time is very exciting. However, no matter how exciting it is, many first-time home buyers feel extremely overwhelmed. Not only is the process time-consuming and expensive, but it can also be confusing. First Fidelis has some advice to help first-time home buyers better navigate the process of buying a home.
1. Work with a Realtor
Buying a home is tricky. First-time home buyers can benefit greatly from working with an experienced realtor. A realtor can help you better understand the buying process, as well as find you homes to look at and provide critical advice throughout the ordeal. Don’t let the cost of a realtor scare you off. In the long run, you are more likely to find a better home and get a better deal when you work with a realtor—especially if you don’t have any experience purchasing a home.
2. Know What You Can Afford
The first and probably most important step in purchasing a house is determining how much you can afford to pay for a house. It is important to know your monthly budget to determine what you can spend on your mortgage, including taxes, insurance, HOA fees, etc., each month. A good rule of thumb to follow is to make sure that your monthly payments are no more than 25 percent of what you bring in each month. You can also use mortgage calculators online to get a good basic number figured out. However, speaking with mortgage brokers or financial institutions will be your best bet. You should also come up with a hard number that you won’t go over and stick to it. This may mean that you miss out on a house that someone outbids you on, but you don’t want to end up in a situation where your mortgage payments are too high each month.
3. Save Up for a Down Payment
Most people aren’t going to pay for the cost of their new home upfront. However, a down payment will help reduce the monthly mortgage payments without forcing you to pay for the entire house at once. While it is common to put 20 percent down on a house, that isn’t always an option, especially for first-time home buyers. Many first-time home buying programs offer down payments that are as low as three percent.
There are a few benefits to putting at least 20 percent down. For example, mortgage insurance will be required if you put anything less down on your home. Additionally, your mortgage payments will be a lot lower if you make a 20 percent down payment.
However, all down payments are a hefty sum of cash. For some people, the best thing to do is save up as much as possible to try to increase their down payment as much as possible before pulling the trigger on buying a home.
4. Be Ready to Make an Offer
The housing market is in a unique position right now. It is a seller’s market, which means that there aren’t many houses available and bidding wars are likely to take place on homes. This also means that many homes are going to end up selling for above asking price. Home buyers need to be prepared to make an offer quickly; and to get the house that you really want, you might have to offer more than the asking price.
Work closely with your realtor to ensure that you are making a deal that could potentially help secure you a home without getting a bad deal on the home.
5. Get Preapproved for a Loan
Help yourself get a bit ahead in the home buying process by getting pre-approved for your mortgage loan before you start house hunting. Doing this will help you better understand what you can truly afford before you waste time looking at homes that are outside of your price range. Additionally, this can help speed up the buying process later on and save you valuable time when it comes to making a deal with the seller.
6. Make a List of Non-Negotiables
Some home buyers will have a few requirements that their home must meet. It is a good idea to come up with a list of things that will make or break a home for you before you start looking. If you want to stick to a particular area, that should be included on your list. If you must have at least four bedrooms, then you need to make sure that it is on your list of non-negotiable criteria that your house must meet. No matter what these are, be sure that you communicate the non-negotiables with your realtor before you start looking at potential homes.
Remember, you can always add things to your list as they come up. Maybe you go to a home that is missing something that you deem crucial. At this point, you will want to add that to your list and let your realtor know.
It is also important to remember that you may have to compromise a bit. Maybe to get a home in your ideal location you will have to be open to renovations. It can be hard to find a home that meets every criterion that some homeowners have, and at some point, you may have to give a little.
When you are ready to start looking at lenders, don’t forget about First Fidelis. We help home buyers in the Kansas City Metro Area get great mortgage rates by working with numerous lenders. In this competitive home buying market, getting your mortgage in place is a critical step in house hunting. To get started, call us today at 913-205-9978.