If you’re getting ready to buy a first home, congratulations! You are officially a first time home buyer!
The right choices can save you money, so get the information you need to be financially savvy on this journey. A house will probably be your biggest purchase, so why not take every opportunity?
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Smart Things to Know Before You Look for a House
There’s research to do as a first time home buyer that will help you feel confident in your decisions and process.
Study the local real estate market where you’re looking. Learn what houses comparable to ones you might want have sold for recently. That’s important context to have when you start home shopping.
Know for sure what is financially realistic for you. Who wants to fall in love with a house they later find they can’t afford? Get pre-approved for a mortgage, and shop around different lenders. Consult with several to see who offers you the best number.
Find out what type of mortgage is best for you. Are you eligible for VA, USDA, or other government-subsidized loans with lower rates? If you are using a traditional lender instead, is a 15-year or a 30-year mortgage the better choice to save money in the long-run? Don’t be afraid to ask questions.
Just the Facts
Base your mortgage decisions on your income now, not what you project it will be. Otherwise, you run the risk of too-high payments that lead you into costly debt. Your house should require no more than 30% of your monthly income. If you wind up getting that promotion and can pay more on your mortgage, you’re ahead!
Find out all the costs of buying and moving in advance for first time home buyers. For example, know what to expect at closing. You will need to pay for a home inspection, 1-8% of the purchase price in closing costs, for movers, and perhaps new HOA fees. No one likes unpleasant surprises.
Smart Things to Do to Save Money
Increase your credit score as much as possible beforehand by paying down card balances and not taking on any new debt. The better your credit, the better your pre-approval numbers.
Have, even if it takes time and planning, at least 20% for the down payment. It will save substantial money on mortgage payments/interest over the years. Go with no-risk savings options: as tempting as high-risk, high-yield investments may look, this is not money you can lose. It has to be available when you need it.
Look for ways to cut spending. Little things like meals out and lattes do add up, so try to put this money toward your savings instead. Consider postponing things like vacations or splurges to get you to your home goals faster.
Earn some extra money to save; you’re investing in your future. Take on another job, or explore ways to make money online by working at home, answering marketing surveys, or selling things you don’t want to pack on eBay or other sites.
The bottom line is that the more funds you have at the ready for your new home, the more money you will save long-term. You may even have some to invest in home improvements, so you can someday sell for more. Know what you need to know to make the smartest decisions for you!
Another Great Choice
As a first time home buyer, we suggest that you work with a successful local real estate agent. They have a reliable source of knowledge and good advice. They have the experience to see savings where you might not, and the negotiating expertise to get you that better deal. Check out the top realtors in your area.
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