Becoming a homeowner for the first time is an exciting proposition. You’ll have more freedom with your own home than you’ve ever had under a landlord, you’re acquiring what’s likely to be your greatest financial asset up to this point, and you’ll have ways to build equity and wealth. Of course, the process can also be quite intimidating, and you have to realize that you’ll be responsible for all maintenance, repairs, and anything that goes wrong with the home.
Don’t let that stuff ruin what should be one of your biggest moments, though. With these tips, you’ll be well on your way to securing your first home and having a place to retire to, a place to start a family or support any of your other goals. Here’s what first-time homebuyers need to know.
You have options for mortgages.
Unless you have enough cash to buy your home outright, you’re going to need to take out a home loan, also called a mortgage loan, to help pay for it. The biggest mistake that many borrowers make is going with the first lender they talk to. At the least, you should speak with a few different lenders just to see if you can get better rates from one lender compared to others. You’ll also need to think about the different factors that can affect you when applying for a mortgage.
When borrowers are ready to fill out a mortgage application, they need to be aware that things like the location of their new home, the price of the home, their down payment, and the loan type can all affect their monthly payments. As a buyer, you also need to be aware that your credit score will play a major part in your interest rates. That’s why, before you even speak to a mortgage lender, it’s a good idea to get a free credit report from one of the major consumer reporting agencies, like Equifax, Experian, or TransUnion. If you notice any errors in your report, you can dispute them, or you may even be able to work on improving your score.
You also have options outside a conventional home loan. For example, the Federal Housing Administration provides FHA loans to homebuyers with credit issues for lower rates than they could get from a conventional mortgage. Those looking to purchase a home in a rural area may also qualify for a USDA loan, with zero down payment, but this is limited to cities with populations under 20,000.
Yes, you need a real estate agent.
You may be looking to skip commission costs by handling your entire home buying experience yourself, but it would be a mistake. This is especially true considering that it’s currently a seller’s market, thanks to the increased demand for housing spurred by COIVD-19. This is a rare instance where the seller has an advantage over you, so you’ll need someone who knows the real estate industry to guide you toward the best home and the best deal for your needs.
Conduct your own home inspection.
It’s true that homeowners are generally required to pass a thorough home inspection before they can list their property, but it’s always best to be safe. The last thing you need is to discover that the previous owner didn’t take care of the home’s systems. Once you purchase the home, you’ll be responsible for the annual AC maintenance for your system, and you don’t want to suffer costly repairs from the start.
You’ll need to reliably change the filters for your HVAC system each month, and it’s a good idea to be part of an annual maintenance program. Before that, though, it’s best to get your own professional to inspect the home to make sure everything will be in working order when you move in.