For a first-timer, buying a house can be a challenge. After all, there are so many measures, activities, and requirements, and you may be reluctant to make a costly mistake. However, first-time homebuyers often enjoy several special benefits intended to draw new entrants to the housing market.
To help you understand the fundamentals better so that you get the most out of your purchase, here’s a detailed guide for you that we compiled from the experts at AK Premier Real Estate Services in the Raleigh North Carolina area:
Plan and Save Early
The down payment criteria will depend on the nature of the mortgage you select and on the creditor. Some traditional loans targeted at first-time homebuyers with excellent mortgages allow as little as 3% down payment. But sometimes, a small down payment can be difficult to save. For instance, a 3% down payment on a $150,000 home is $4,500. Use the down payment calculator to determine the budget, and then start setting up automatic transfers from the check to the savings to get going.
Another cost that you need to save for is closing costs. Closing costs are the fees and taxes you pay to finalize your mortgage, which usually ranges from 2 % to 5% of the loan value. You can expect the seller to pay a percentage of your closing expenses, and you can save on some of the prices, such as home inspection, by shopping around. You would also need some amount when you move into the place, so plan and save for that.
Using a professional realtor
The realtor will make or break the experience of buying your house. If you know where you’re going to live, try to get a real estate agent referrals. Fifty-four percent of buyers chose their agent on a personal recommendation or used an agent they had already worked with, according to 2014 statistics from the National Association of Realtors. First, ask for advice from your peers, family, or friends who live in your area of interest. If that fails, you can go through some real estate websites having all the local property ratings.
Compare mortgage rates and fees.
The Consumer Financial Protection Bureau suggests asking several lenders to compare the prices, including interest rates and potential origination fees, for loan estimates of the same form of a mortgage.
Lenders can allow purchasing discount points that are fees paid by the borrower in advance to lower the interest rate. Buying points can make good sense if you have the money at your disposal and intend to sit at home for a long time. You can use a discount point calculator to make a decision.
Stick to your budget
A lender may agree to lend you more than what is conveniently affordable, or you may feel pressure to spend beyond your comfort zone to beat another purchaser’s bid. To prevent financial uncertainty along the way, set a price limit based on your budget and adhere to it.
Look at the property under your price cap to allow a certain amount of space for bidding in a competitive market.
Your first home is a massive purchase — perhaps even the biggest in your life you ever made! You wouldn’t want to chance to mess up because of that. A real estate agent will bear the load off your shoulders by assisting you in finding a house, negotiating a contract, and seeing through the process before you close.