Buying a home is an exciting process, but if you’re a first-time buyer, be prepared for surprises. Buying a home involves much more than finding a home and making the payments. There’s a lot of stuff that goes on beforehand to make sure you’re actually qualified to buy a home.
Just like everything else in life, it helps to be prepared. Whether you’re moving out from your parents’ home, a dorm room or an apartment you’ve rented for many years, you’ll want to be smart about buying your first home. Follow the tips below and you’ll walk into your Realtor’s office feeling like a pro instead of the novice you truly are.
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Build your credit score and savings.
Most loans will require that you put down a sizable down payment, so start saving now and see how doubling the cost of everything can turn into extreme savings. A couple thousand dollars isn’t going to cut it. Some loans require as much as 20% down, so you might need $40,000 or more for a decent house. At the same time, make sure you’re building your credit score. Pay down debts and make sure bills are paid on time. A higher credit score means better loan rates, which will save you money in the long run.
Take a look at these 8 Frequent Mistakes People Make When Rebuilding Their Credit.
Get pre-approved before you start looking for homes.
Unless you just won the lottery or inherited a ton of money, you’re going to need a loan in order to buy a house. But don’t delay when it comes to getting pre-approved for a loan. You’ll want to do that before you start looking for homes. Why? Because pre-approvals contain your credit history and score. They tell you what types of loans you qualify for and how much you can afford. This is especially important because you don’t want to be looking at homes in the $500,000 range if you’re qualified to buy houses under $300,000. This just wastes everyone’s time and real estate agents – and sellers - won’t take you seriously. Some sellers won’t even consider your offer unless you’re pre-approved. Save time and shop smartly by getting pre-approved before you start your search.
Use your pre-approval information to start your search.
Once you know how much you can afford, you can start looking for houses in that range. The good thing is you don’t necessarily need your real estate agent to help you with this part. There are now many websites you can use to search for homes based on a variety of elements, such as price, size, neighborhood, number of bedrooms and bathrooms and much more. Trulia and Zillow are some good sites to try so you can narrow down your choices.
Stay focused without getting emotional.
Going back to the previous tip, it’s important to narrow down your search, but don’t settle on just one house. You should have several backups in case something happens – and things do happen a lot in the real estate industry. Maybe you found the home of your dreams, but the seller won’t negotiate on the price or the inspection found major damage. Low appraisals, rejected offers and additional documentation requirements are common and can affect a potential sale. Many things are beyond your control, so it’s good to not only have backups, but to keep emotions in check as well. You may be lucky and close on your first house without any issues, but that’s the exception, not the norm. Just don’t get too upset when things don’t go your way. There are plenty of other houses out there, so think positive and stay focused on finding the home that’s right for you.
Don’t end up with buyer’s remorse.
Enjoy your new home without remorse. You may want to hurry up and move into your new home, but don’t forget one final step: the home inspection. This is where you’ll see if the home has any structural damage or pests such as termites. Even if the home looks perfect, there’s a good chance it’ll have some minor imperfections. Many of these items can be easily fixed and won’t cost too much money. If there are some issues, you can negotiate with the seller to have these items fixed before you move in or to lower the price accordingly. Note that a home inspection is not always required, but you should do it anyway, no matter what. You don’t want to be stuck in a home that’s falling apart, and you’ll likely have no recourse once you sign the paperwork and move in. The last thing you want is to regret this expensive purchase.
By following the tips above, you’ll stay focused on your home-buying journey while making smart decisions. While disappointments and setbacks are common in the real estate world, you must keep your emotions in check. Stick to your guns and stay within your budget. In the end, you’re sure to find a beautiful home in the neighborhood of your choice, with a payment you can comfortably afford.