A home is often the most significant purchase people make throughout their lives. Knowing what to do before, during, and after you buy a home is crucial if you want to save money and ensure you’ve made the right financial and personal choice for you and your family. Unfortunately, many first-time homebuyers make mistakes throughout their homebuyer journey, which is why we’re here to make the process as smooth as possible. Here are some best practices for first-time homebuyers.
Most first-time homebuyers aren’t aware of their mortgage options. When people think of mortgages, they’re likely thinking of conventional mortgages, which require a 20% down payment and have stringent requirements. However, many options are available, including adjustable or fixed-rate mortgages, non-QM loans, and traditional loans. With these options, you can reduce your down payment and monthly mortgage payments or become eligible for a home loan with more flexible requirements.
Of course, some options are better for particular individuals than others. For example, freelancers or self-employed individuals may not qualify for a conventional mortgage because they don’t have a regular income or meet the strict job history requirements. In these cases, prospective borrowers might choose a non-QM loan with lower down payment options and less stringent lending criteria. Regardless of your income, it’s important that you look into different mortgage options so you don’t end up breaking your bank.
Many people make the mistake of purchasing a home when they’re not ready yet. A lender’s only job is to ensure your quality for a loan and tell you how much you qualify for. While they might dig deep into your financials, credit history, and job history, only you can determine whether or not you’re ready for such a significant loan. In addition, homeowners may think they can afford the cost of a home, but they don’t realize the expenses beyond the home loan. For example, you’ll need to make home repairs, have a buffer for emergencies, and have a housing expense that will allow you to afford the home while paying for other necessities.
While many loans, including FHA loans, allow you to put less than 20% down on a home, you should put down as much as possible, especially if you want to save on your monthly mortgage bills. Putting down more than required can reduce your overall loan, saving you money in the long run because it means less interest overall. However, before you put all your savings into your down payment, you should consider other costs of getting a home loan, such as closing costs and underwriting fees.
Every homeowner is different; some want at least 2.5 bathrooms, while others want a house with a pool. Whatever the case, you should list your non-negotiables to give your realtor so they don’t waste their time looking for homes you don’t want. Of course, you should have realistic expectations. For example, your budget may prevent you from getting everything you want in a home. Still, you can create a list of the essentials, such as top-rated schools, distances to stores and work, home type, and home features.
Work With an Agent
Working with a real estate agent is the best way to make your first-time home-buying experience less stressful. If you don’t have one already, you can find one through your mortgage lender or do a quick online search to find one in your area. Working with a realtor is crucial, and it costs buyers nothing. Usually, the seller pays the commission, so there’s no reason not to work with a realtor to let them do the hard work for you. These individuals will take care of everything from finding your dream home to helping you negotiate prices and sign paperwork.
Before you agree to purchase a home, you should have it inspected to ensure there are no issues that will require you to spend a significant amount to fix it. For example, if you purchase a home only to find out it has a leaky roof, you are responsible for fixing it. However, if these issues are identified before you buy the house, you can negotiate the price with the current homeowners and reduce how much you spend on the home to have enough maintenance.
Once you’ve closed on the home and the previous owners have moved out, always change the locks. While most homeowners will hand over their keys, you never know who they’ve given a copy to. Therefore, it’s always a good idea to hire a locksmith who can change your locks and ensure you’re the only person with access to your new home.
Auto insurance rates will change when you move, especially if you’re moving across cities or states. Therefore, you should always check with your insurance agent to let them know you’ve moved and learn about your new rates.
When you move, you should contact your employer, accountant, and anyone who sends you bills to ensure they’re sent to the right place. For example, your employer must have accurate records of your home to send you tax information, and your accountant needs the same information to enter into their tax software to file taxes on your behalf. In addition, your credit card company, auto loan provider, and anyone else who sends you a bill should be contacted to ensure you don’t miss any payments that can affect your credit score.
Once you’ve moved, you can explore the neighborhood to ensure you know how to find everything from schools to stores. Of course, you can use an app on your phone to help you navigate your new community, but exploring on your own can be a fun way to help your family learn about their new home.
In addition to exploring the neighborhood, try to meet as many neighbors as possible. You never want to seem like a neighbor who never talks to anyone, so it’s a good idea to introduce yourself as soon as possible. Your neighbors can also be a good resource for helping you learn more about your community, especially if you’re unfamiliar with the area. In addition, if you have children, talking to the neighbors can help you discover if there are any other children in the neighborhood so they can begin making friends as soon as possible.
Being a first-time homeowner can be exciting, stressful, and chaotic. However, the actions you take before, during, and after you find your dream home can make the experience more seamless and stress-free to ensure you enjoy it.
About the Author:
Megan Isola holds a Bachelor of Science in Hospitality and a minor in Business Marketing from Cal State University Chico. She enjoys going to concerts, trying new restaurants, and hanging out with friends.