Make Buying Your First Home Less Stressful With These Tips for First Time Home Buyers Part 2
Read these tips for first time home buyers, continued from part 1, posted earlier this month.
Make sure you review your credit.
When you take out a mortgage loan, your credit will be one of the key factors in whether or not you are approved, and will help determine loan terms and interest rates. So make sure you review your credit in advance, and make steps to improve your credit score if needed. Speaking about credit, if you’re applying for a mortgage soon, pause any new credit activity, and avoid opening new credit accounts to keep your score from being affected and dipping.
Learn about your down payment options.
For first time home buyers, there are many programs to assist with coming up with the down payment, like federal mortgage programs, FHA, veterans loans and more. Research all of these and find the right ones for you before you commit to a purchase.
Hire the right real estate agent.
You will be working closely with your real estate agent, so it is important that you find somebody you get along with well. The right agent should be very qualified, motivated, knowledgeable about the area and the market, and be committed to getting you into the right home and have patience and understanding along the way.
Budget for closing costs.
Don’t forget that you will need to budget for the money required to close your mortgage as well, which can be great. Closing costs typically run between 2% and 5% of your loan amount. Shop around and compare prices for closing expenses, like home inspections, titles, and homeowners insurance. You can also defray costs by asking if the seller will pay for a portion of your closing costs or negotiate your real estate agent’s commission.
Compare mortgage rates and options.
Many homebuyers get a rate quote only from one lender, but it is important to compare different mortgage rates from several lenders, so you don’t leave money on the table and are able to save the most money possible over the course of your loan. What type of loan is right for you? A 30 year? A 15 year? Fixed rate or adjustable rate mortgage? Be sure to do a lot of research before you commit to a particular lender.
Lastly, set aside some money for using after you move in.
Set aside a buffer additional budget for after you move into your new home. Most first time home buyers realize after moving in that they forgot a few more furnishings, or appliances, rugs, new fixtures, new paint and other misc items you will want to have when you move in.