Purchasing your first home is an important decision that will set the stage for your future life. It’s the place where you will call home for the next 5 years or so, which is why you should go into this venture prepared. Here are some tips I feel every 1st time home buyer should know:
1. UNDERSTAND YOUR CREDIT
Since you most likely will need a mortgage to buy a home make sure your credit is clean. Get a copy of your credit report and fix anything that might be a negative impact. Your credit score includes the following five categories: history, length, amount owed, types and new applications. It is used to measure your creditworthiness.
2. BUY A HOME THAT FITS YOUR BUDGET
Traditionally, bankers believe that your housing expenditures should amount to 29% of your gross monthly income and 41% of your total household debts. This will ensure that you have enough money to pay all of your bills.
3. BUY A HOME NEAR GOOD SCHOOLS
Even if you don't have kids, when it comes time to sell this can be very important to your potential buyer.The resale value of your home will be higher if it is located in a district with good public schools. Good schools are positive centers of family activity with classes, musical performances, and sports activities. To ensure you make a return investment when you sell the property in the future, choose a location that is easy to market, such as a home near great schools.
4. GET PRE-APPROVED
Before you go searching for the home of your dreams get pre-approved. This will ensure you are looking in the right price range and also prove to the seller that you are a serious buyer.
5. CHOOSE A LOCAL & TRUSTWORTHY MORTGAGE LENDER
This is very important to choose a lender you can trust. There is still nothing like face to face contact or being able to pick up the phone and speak to a mortgage lender that has your best interest at heart.
6. HIRE A PROFESSIONAL HOME INSPECTOR
A professional home inspector can check everything to determine if it is up to code. If you find problems, you might be able to get the previous owner to fix them before the sale is completed. Save money and prevent potential headaches with a good inspection.
7. YOU DON’T HAVE TO HAVE 20% DOWN TO PURCHASE
Though mortgage lenders have tighter restrictions for providing loans these days, it’s still possible to find mortgage rates for as little at 3%. However, it’s still advisable to put down as much as you can afford. The lower the down payment, the higher risk the loan is in the lender’s eyes. Plus, if you have to sell in the immediate future, it could be costly, since you have no equity in the home and may not be able to sell for the same price you bought it for.
8. DON'T BUY IF YOU DON'T PLAN ON STAYING PUT FOR A FEW YEARS
With the expense of buying and selling its important to make sure you plan on staying in your home for a reasonable amount of time even in rising markets. Closing costs can be expensive if you repeatedly sell and buy, resulting in more loss than gain.
9. CHOOSE A PROFESSIONAL REALTOR
This is very important because a Realtor has knowledge of market values from area to area. So many times you will pay more than you should when you purchase from a for-sale-by-owner. Employ a Realtor and get their local expertise. They can not only provide inside market tips for advice for whatever your goals are.
10. INVEST IN A HOME WARRANTY
A home warranty in most cases is a very inexpensive way to ensure peace of mind with your new home purchase. Don’t let any accidents or disasters ruin your home living experience.
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