Tips for First-Time Homebuyers

Are you still a renter but planning to switch to homeownership soon? Are you looking into the rent-to-own process or, maybe, just started scrolling through platforms with homes for sale to get a better understanding of costs that await you in the nearest future? There might be plenty of reasons why you might want to buy your first property as well as there is a lot of things to learn about, keep in mind, and be aware of for the first-time homebuyers.

For this reason, we’ve collected the list of best tips for those who want to buy their first home. Check them all out to make your transition from a tenant to a homeowner as smooth and stress-free as possible! Also, at the bottom of the article, you can find tailored advice for buying a specific type of property, such as a house, condo, loft, and some more.

Best Tips for First-Time Real Estate Buyers

So, let’s start with the advice that would be useful for any home buyer, especially if it’s the first home you purchase in your life. From some tips on managing your finance to advice on how to deal with your expectations, ready to learn everything you need?

Take Care of Your Credit in Advance

Is your credit score above 800? In this case, our congratulations (although, make sure to keep it up)! Still, many people know that their credit score needs some tender loving care. We recommend starting working on your credit score way before you take any other steps towards buying a home.

Your credit score influences whether you qualify for a mortgage and what interest rates you can expect. Wonder what credit score you should have when going to buying a home? The answer is simple (although frustrating) — as high as possible. 

While the minimum credit score required for an FHA loan is 500 (with a 10% down payment), if your score is higher than 580, you qualify for a 3.5% down payment. An impressive difference, isn’t it? For those loans that do not require down payments, such as a VA loan and a USDA loan, a minimum credit score starts at 620 and 640, respectively. 

Just from this short example, you can see that a higher credit score means a lower down payment (if any); the same goes for interest rates your lender will offer.

Note: Check out this article on our blog to get some insights on how to improve your credit score.

Look into First-Time Homebuyer Programs

There are plenty of both national and state grants and loan programs for first-time homebuyers, so you should look up if you are eligible for any of them before taking any active steps. Some programs offer a smaller down payment, or no down payment, while others, such as the Good Neighbor Next Door program, provide discounts on a listed price. If any of these programs are applicable for you, you should definitely use this opportunity, as it helps those who don’t have enough funds for a large down payment or need closing cost assistance.

Plan Ahead

You might find a suitable one-bedroom condo that fits all your current requirements and is perfect for your lifestyle. But, we recommend searching for the property you believe you might want and need in a couple of years instead.

Sure, life is unpredictable, and you never know when you will end up in three to five years. However, if you know for sure you want to start a family sometime soon, it might be wiser to take a closer look at a place that will be able to comfortably accommodate two adults. You can even purchase a home with an extra room that can be used as a home office but can be converted to a nursery, should such a need arise. 

Obviously, you have to assess your financial situation and how much you can realistically afford right now. Nevertheless, the whole process of selling a home and buying a new one is rather tedious, and thinking ahead might help you avoid this as soon as you face the first change in your family status.

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Evaluate Your Savings and Financial Situation

Before you can start looking for a real estate agent and the house itself, you need to have a sufficient amount of money in savings. There are certain costs you will most probably have to deal with when buying a home and have them covered with your savings. They include down payment, closing costs (usually from 2% to 6% of the home’s purchase price), homeowners insurance and private mortgage insurance, and some other minor expenses, such as HOA fees.

As usual, there is no one-size-fits-all answer on how much exactly you should save — it all depends on your situation, the types of mortgage, the amount of money you can put down for a house, and monthly payments you expect to make. That’s why you should look into mortgage options, establish how much house you can afford, and specify the exact amount of money you must have to start a home buying process.

Have Some Extra Money Available

So, you know how much money you need to save. Now, add another extra thousand (again, in a perfect world, the amount would be as much as possible) for some unforeseen circumstances. No matter how well you will calculate every expense that awaits and how frugal you might be, you will most probably face at least one extra cost you didn’t account for. To give yourself some breathing room and not make one of the most important purchases in your life even more stressful, make sure to have some extra cash. 

first-time homebuyers

Tips For Buying a House

Your own house with a white fence in a suburb is an embodiment of the American dream. Years go by, but the idea of purchasing a house still captivates the minds of people all around the US. If you’re one of those who dream their first property to be a single-family home, here is something to keep in mind.

  • Pay attention to the exterior

While some tend to focus on small details such as chipped cupboards or horrendous wall color, what you should really look at is the bigger picture. After you buy a house, dealing with all the issues becomes your job as a homeowner, so make sure you wouldn’t have to involve in large projects such as strengthening the foundation or replacing the roof. To avoid that, meticulously check the exterior of every house and assess the quality of the roof, walls, sidings, and foundation. Also, it’s always a great idea to ask a professional for a second opinion.

  • Prepare for extra responsibility

The amount of engagement in the rental property is nothing compared to what you can expect when buying a single-family home, which can be a big discovery for first-time house buyers. From now on, you’d have to upkeep both the inside and the outside of the building, including the structure itself and the land that comes with it. Usually, it requires extra money, time, and effort, so make sure you’re mentally and financially ready for this before starting home shopping.

  • Don’t get distracted 

Purchasing your first house is a new and exciting experience. No wonder you might find yourself admiring a beautiful fireplace in one house and pining after gold bathroom sink faucets in another place a day after. Although it is easy to fall in love with the small gorgeous details, you should remember what matters for you in a house the most and remind yourself that you can add most of the bells and whistles yourself after buying a suitable property. After all, a suitable number of bedrooms and a good neighboring school for your seven-year-old is more important than the faucets your house will come with.

Insights Into Buying a Condo

If you prefer the hustle and bustle of the big city to the life in the suburbs, you might decide to look into buying a condominium. While they have plenty of advantages — you don’t have to worry about the building maintenance and can enjoy some extra amenities, there are things to remember as well.

  • Learn about your HOA

A homeowners association is one of the most crucial things to investigate before you settle on a specific condo. Different HOAs might have a different approach to managing any issues and problems, so you have to make sure you agree with HOA’s way of dealing with things. A good idea would be to talk to some of your future neighbors and attend an HOA meeting — investigate if those who live in the building are satisfied and see with your own eyes how the meeting goes and what questions are discussed.

The quality of your life at this exact place will also highly depend on the rules and regulations imposed by HOA, so you should read them before purchasing a condo to avoid any surprises. For example, if you want to get a pet when you finally move into your own place, you might discover that certain breeds are restricted, or there is a ban on pets altogether. 

More like this: Things to Look Out for When Buying Your First Residential Property

  • Expect stricter mortgage requirements

Financing a condo purchase with a mortgage might be more challenging than any other type of property. For example, if you want to apply for an FHA loan to buy a condominium, you have to check the list of approved condos on the HUD website. What’s more, you should provide your lender with some extra documents, for example, the HOA budget. Generally, you might also expect a slightly higher down payment or interest rate if you decide to purchase a condo.

  • Don’t forget about the amenities

Buying a condo, you also buy access to all the amenities in the building, so don’t feel uncomfortable asking what exactly comes with your purchase.  If your building has a gym, laundry room, and mailroom, you’ll save a good amount of money on paying for the fitness center elsewhere and can be sure your package from Amazon will be safe and secure. That’s a nice bonus to have!

Insights Into Buying a Loft

Lofts are charming, perfect for anyone who loves a home with a history and character and can be a truly versatile home purchase. Owning a loft, you can rearrange and adjust it to your lifestyle thanks to the big open space that is so easy to work with! Here are some insights for those who consider buying a loft as their first home.

  • Look into the energy efficiency of the place

Undoubtedly, lofts are gorgeous thanks to the brick walls, large windows, and open spaces. However, this beauty might come hand in hand with exorbitantly high bills if it was not constructed or renovated in a proper way. Make sure to learn as much as possible about the heating and cooling system of the loft, check if the windows and doors are sealed, and ask about the average electricity and heating bill.

  • Sound insulation might be a problem

Another beautiful-to-look-at but difficult-to-live-with issue in lofts is an exposed beam ceiling. You can find this feature in many lofts on the market, but you should be extremely aware of it if you are not tolerant of your neighbors’ noises. Because of the construction, this type of ceiling does not offer much soundproofing.

  • Lofts can be a great investment

While lofts became popular recently and many developers started building new buildings with residential lofts, there are only so many real lofts converted from old warehouses and industrial buildings. That’s why there is a high demand but a low supply of lofts, and it’s not going to change any time soon, making this type of housing perfect for reselling in the future.

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