Buying your first home is one of the biggest milestones in a person’s life. It’s becoming harder each year for someone to buy their first home, but there are still around 2 million people each year in the United States that are making that big leap. Unfortunately, many of those people come into the process completely unprepared, and there are millions more that don’t end up pulling the trigger on that first purchase.
If you’ve been considering buying your first house, you don’t want to go into it blind. Here are five tips on buying your first home that will get you through the process easily and coming out on the other side happy with your big purchase.
Build Your Credit
How much you end up paying in interest and on a per-month basis will truly come down to your credit report. When you’re financing a home, mortgage companies want to know how much they can trust you with potentially hundreds of thousands of dollars. Before you even consider buying a home, get an up-to-date credit report to see what improvements you can make. Paying down credit cards and student loans will play some of the biggest factors.
Even if you have high debt balances, you can still achieve good credit. Your debt-to-income ratio is a large deciding factor, as well as on-time payments. If you have a solid income and have been making payments on time for years, there isn’t too much to worry about. Still, try to make your credit as close to perfect as possible before you have it looked at by mortgage companies so that you can maximize your savings.
When you’re looking for something like a new car or even a piece of furniture, you tend to look around for the best price and the best reviews. For something like a computer chair, you probably read reviews on at least a dozen different Amazon listings, but a shockingly low number of people do the same with mortgages. In fact, only around 15 percent of people shop around the different mortgage companies.
Not only that but only two-thirds of first-time home buyers actually shop around for the house itself. There’s a lot of pressure to sign on the dotted line because of the fear of missing out (or FOMO, if you will), but you don’t want to jump headfirst into something that you’re not ultimately going to be satisfied with. Look around all of the listings, tour the houses yourself, and don’t offer until you fall in love.
Cash has always been king in the real estate market, but there was a time when a vast majority of homes were purchased through mortgages. These days, though, with corporations buying up real estate and retirees having plenty of cash on hand, you might not be able to even purchase a house with the highest bid if you have to go through a mortgage company. Because of this, try to make sure you have as much cash to spend up-front as possible.
Not only does this look good for when you’re making your bid on that first home, but it will also keep your mortgage payments down. It’s hard to liquidate all of your assets so that you have cash, and you don’t want to do it without already having a plan in place. With that in mind, crunch the numbers and see how much cash you’ll be able to get by a certain date to make the process easier.
Know What You Need
One way that you can save a lot (and we’re talking tens of thousands of dollars) of money is by knowing exactly what you want from a house. Do you really need two or three extra bedrooms, an attached garage, and a finished basement if you’re living by yourself or don’t plan on having any children? If you can afford it, go for it, but don’t buy a lot more than you need.
You should also think of the location. You may be able to get a bigger house in the suburbs for the same as a smaller home in the city but think about the commute. If you work remotely more often than not, then the suburbs may suit you better, but city workers will dread that traffic-filled daily drive.
Find A Good Agent
You can go into the buying process on your own and you may turn out just fine, but if you’re a first-time home buyer, it’s best to work with an agent so you can learn the finer details of the process.
If you want the best price and have someone that’s able to find any defects that will need repairs, a buyer’s agent is the way to go. In most cases, they don’t cost much, either, allowing you to focus on that down payment.