For first time home buyers, there’s nothing quite like the thrill of owning your first home. That’s especially true of millennials, who represent about 37% of recent home buyers. There’s nothing quite like having your own space, where you and your family can turn your house into a home.
If you’re wanting to become a first time home buyer and are searching for a house, there are many things you should do to avoid any financial windfalls and to ensure the home-buying process goes smoothly:
- Save for a down payment: A standard down payment on a home is usually about 20% of a home loan. Some companies may allow you to pay less, but you’re setting yourself up for bigger payments down the road. Online down payment calculators can show you how much you need to save for a house in your price range.
- Look into mortgage options: There are a lot of mortgage options available for first time home buyers and each comes with its own pros and cons. Keep in mind that the bigger the down payment you make, the lower your monthly mortgage payment will be. If you’re looking for a forever home, opt for a 30-year fixed mortgage, or if you can afford it get a mortgage with an adjustable rate.
- Look into assistance: Many state and county programs have incentives for first time home buyers such as tax incentives and discounted interest rates.
- Know your limits: When you’re looking around at different houses, it’s important to stay within a price range you can afford. You can find a home affordability calculator to determine what your price range is for buying.
- Check your credit: For first time home buyers, one of the most important things you can do is keep your credit intact. Your credit is going to be one of (if not the biggest) determining factor in whether or not you’re approved for a mortgage and what your mortgage terms may be
- Shop around: When you’re applying for a mortgage, don’t be afraid to shop around. One of the worst things you can do is go to one lender and go with whatever their loan terms are. When you’re shopping for a mortgage, it helps to get at least three quotes to compare rates and fees.
- Get pre-approved: Depending on the company, it can be easy to get pre-approved for a mortgage, but first time home buyers can better their chances by getting a pre-approval letter from a lender. This letter signifies that a lender has thoroughly examined your finances and has signed off on how much they’re willing to give you. Having the letters can give you a leg up on other potential home buyers because it shows you’re serious about buying.
- Pick the right house and area: Once you’ve gotten to the stage where you’re house shopping, you’re going to want to do research to find the right spot for you and your family. You want to figure out how big a house you’ll need, what kind of house you want, where schools are, how accessible a house or neighborhood is, etc.
- Keep the budget in mind: For many first time home buyers, it can be tempting to look at houses out of their price range. It’s best not to let your emotions take over and stick to what you can afford. You might even look at houses below your budget, which can help as you account for utilities, repairs, etc.
- Go to open houses: For 1st time home buyers, one of the best things you can do in your hunt for a house is attending open houses. This gives you a chance to see places you like up close and get a feel for sights, sounds and smells of a place and give you the chance to ask any questions you have.
Whether you’re interested in commercial real estate, luxury real estate or something else, taking time to sort out all the particulars before and during the house buying process will make everything go much smoother. Instead of finding yourself in a constant uphill battle, you’ll ease your path to becoming a homeowner and be a lot happier as a result.