The lure of being a first-time homebuyer can be irresistible. Nevertheless, making an impulsive purchase is never the right way to go about a first home purchase. You see, as with any major investment, purchasing a home is a critical project that’s worth taking your time to ensure you get it right. Meaning, you need to put in measures to ensure that you don’t make a regrettable purchase that’ll hurt your future financial goals. So, regardless of your reason for buying a home, here are a few tips to guide you through the process, from start to finish.
Assess your financial position
If it’s not obvious already, homeownership isn’t cheap. Therefore, the first tip for a first home buyer is to ensure you have the means and ability for such a purchase, and the best way to do so is by assessing your financial position. This gives you a good understanding of your home budget and how much you can afford to borrow.
Keep in mind that the average mortgage loan term is between 15 and 30 years. So, you need to be sure that you are ready to commit to a monthly mortgage payment for this length of time. You can start by confirming if you have an emergency fund, a stable source of income, and substantial savings that’ll cover not just the downpayment but also closing costs and move-in expenses.
Explore mortgage options
Acquiring a mortgage is a pivotal step when buying your first home, and there are various mortgage options worth exploring before settling for the most convenient loan program. Some popular mortgage options include opting for a conventional loan, federal housing loan (FHA), USDA loan, or VA loan.
These loan options are available for first-time buyers depending on the purpose of the land and your social and financial status. For instance, while the FHA loan program can be used anywhere, USDA loans are restricted for rural areas, and VA loans are reserved for military members, spouses, and veterans. Nevertheless, these loan options are worth considering because they require zero or minimal down payments and can make your purchase more affordable.
Furthermore, another way to lower the cost of owning a new home is to look out for first time home buyer programs. Many cities and states housing agencies have programs that offer down payment assistance, closing cost assistance, and tax credits to first-time home buyers.
Maintain a stable credit score
Irrespective of the mortgage lender you choose to use, most of them will request to see your credit score before qualifying you for a mortgage loan to confirm if you have a stable score. As such, you must take steps like paying all your bills at the appropriate time and keeping your credit card balances to the minimum.
All these ensure that you strengthen and maintain a stable credit score. In addition, it’s worthy to note that your credit score can affect your mortgage’s interest rate. So, a high credit score would attract a lower interest rate and vice versa for a low credit score.
Take precautionary steps
As the old English proverb goes, prevention is always better than cure. You must ensure that you conduct adequate due diligence before purchasing a home. For starters, you should use a real estate agent since they are professionals who’ll make the home buying process seamless and less complicated.
In addition, don’t treat home inspections like a formality. Take them seriously, as there are reasons why they’re held in the first place. Home inspections exist so you can have a thorough assessment of every area of the house, so feel free to be as nosy as possible. Lastly, don’t forget to buy suitable homeowners insurance and keep the paperwork of all documents in a place that’s easy to access in the event of an emergency.
Interesting related article: “What is a Mortgage?“