Are you looking to buy your very first home? Before you go out hunting for a property, there are important things you need to remember. Also, since it’s your first time buying a house, you need to get the best advice for buying a home.
But what exactly are the best home buying tips you need to know? What are the essential factors and considerations you need to remember when buying a property?
Let’s take a look at the most important ones below.
Settle all your debts
One of the most important real estate advice for buyers, especially for the newbies is to settle your debts first before buying a house. Owning a home is one of the most expensive things you can spend on. Sure, you may secure a mortgage that is lower than what you used to pay when you were still renting. However, owning a house means you will have to shoulder all the maintenance expenses of the property.
Unfortunately, these expenses can pile up faster than you can imagine. Thus, it is best to settle your debts. Also, this is the time to revisit your credit standing and build an emergency fund.
The emergency fund should be six months’ worth of your monthly salary. This is the fund that you’ll use in case there’s a huge expense that surprises you along the way.
What type of home do you need?
After settling your debts, decide on what type of house you need. This is a crucial step in home-buying, as it will set the direction for your house-hunting.
There are different options for residential properties. Your goal is to find the best one that suits your needs and goals. For starters, there is the traditional single-family home.
There are also the duplex and townhouse options for bigger families. If you’re single and you live alone, a condo is a good place to start with.
Also, identify the specific features you want to have in the house. Write down your essentials and the features that you don’t want in a house.
Determine what you can afford
You also need to determine how much you can afford. This is the stage where you will revisit your current financial health. How much savings do you have in the bank? This should be on top of the emergency fund we discussed earlier.
Your goal is to find out how much you can afford by checking your monthly budget. When it comes to this budget, your cap should be no more than 25% of your monthly net income.
Moreover, your budget should also be enough to cover other housing costs like taxes, insurance, and homeowners association fees. It is best to consult with a trusted real estate agent concerning property taxes and insurance.
Work on your down payment
Since you’re not likely to pay in full, you need to work on your down payment. Don’t shy away from giving a down payment, as it helps minimize your risks. Giving the right amount of down payment will send a message to the seller that you’re serious and capable of buying his property.
You want to give a down payment of at least 20% of the home’s selling price. In doing so, you also get to avoid paying the private mortgage insurance. PMI is the insurance that protects the mortgage company if you cannot continue paying your mortgage for any reason.
Secure that pre-approval
With your budget in place and your 20% down payment ready, you need to secure that pre-approval from a mortgage lender. Getting a pre-approval adds to your credibility as a prospective buyer. When a home seller sees your approval letter, he will likely put you on his shortlist of serious buyers.
Prepare all the documents of your assets. Get your statements showing your proof of income ready. If you’re an employee, secure an employment verification from your company.
In addition, be ready to show a good credit score to the lender. Ideally, you want a score of no less than 760 to enjoy the lower interest rates.
Scout within your local area
Thorough research and due diligence are key to finding the right home. If you want a house within your local area, take time to research what your local real estate scene has to offer.
Go online and drive around the area and scout for houses for sale. Also, you may want to connect with a trusted local real estate agent. The great thing about this is that a good agent knows the ins and outs of the local home buying and selling landscape. Additionally, they give real estate tips for buyers that you may not learn elsewhere.
Learn to negotiate
Last but not least, learn to negotiate. Go hard when negotiating and stay in control. Negotiate in the right manner by not low-balling the seller. Instead, negotiate in small increments. This way, you can narrow the gap between your offer and the selling price without losing your edge against other buyers.
If these things overwhelm you, don’t hesitate to contact our real estate team. We offer first-time home buyer programs in Chester County, PA to help you out in your house hunting. Connect with us today at 484.467.8480 or shoot us an email at remaxdirectwc(at)gmail(dotted)com.