Tips for First-Time Home Buyers
Posted: April 30, 2024 by Kate Dabbs
Becoming a homeowner is exciting, emotional, and (sometimes) stressful, especially for first-time buyers. Since we’re in the peak of the selling season this month (April is actually “New Home Month” according to the National Association of Home Builders), understanding the essentials of home buying is crucial. We’re here to guide you through each step of the process, ensuring your buying experience is as smooth as possible. Here are some things to know before you buy a home.
Save for a Down Payment
One of the most significant steps in preparing to buy a home is saving for a down payment. This upfront payment is your stake in the home purchase and affects your monthly mortgage payments and interest rate. You generally want to aim to save 20 percent of the purchase price to avoid private mortgage insurance (PMI). Start by setting a monthly savings goal. Then you can automate transfers to a dedicated savings account to streamline the process. However, you don't need to have a nest egg set aside to buy your first home. There are opportunities like down payment assistance programs, the First-Time Homebuyer Tax Credit (up to $8,000), as well as other government loans available to help.
Find the Right Lender
Choosing a lender is about finding a partner to walk you through the intricacies of buying a home. It’s not just about finding the lowest interest rate. It’s a good idea to look for your lender early in your home-buying process to compare rates, fees, and the level of customer service. Getting pre-approved for a mortgage also enhances your credibility as a buyer when you make an offer on a home. Your lender can also review your credit score and offer financial counseling to chart a path toward a better loan position in the future.
Understand Your Credit Score
Knowing your credit score is a crucial step before applying for a home loan. Your credit score is one of the most important factors lenders consider when evaluating your mortgage application. A higher credit score generally qualifies you for better interest rates and loan terms, potentially saving you thousands of dollars over the life of the loan. On the other hand, a lower credit score may result in a higher interest rate, larger down payment requirements, or even loan denial. By checking your credit score and report beforehand, you can address any errors or issues that may negatively impact your score.
Trust Your Real Estate Agent
A knowledgeable real estate agent is indispensable, especially when buying your first home. Your agent’s understanding of local market trends and neighborhoods will help you find a home that meets your needs and budget. At Marchant, our agents specialize in guiding new buyers through the details of different neighborhoods, ensuring you make an informed decision. Trust your agent to help you navigate your options and advocate on your behalf.
Create Your Must-Have List
Before starting your house hunt, clearly define what you need and what you’d like to have in your new home. Distinguish between essentials (the number of bedrooms, accessibility features, etc.) and desirables (like a swimming pool, or specific architectural style). This must-have list will help your real estate agent discover homes that meet your criteria.
As we head deeper into the spring selling season, it is important to capitalize on the typical increase in inventory. Historically, more properties are available, which provides you with a broader selection of potential homes.
Purchasing your first home is an incredible achievement, and being well-prepared can make all the difference. From saving for a down payment to building a relationship with your real estate agent, each step leads you to your new home. If you are ready to start your home buying journey, let’s work together–connect with a Marchant agent today.
