Buying your first home is quite the milestone, and it’s not an easy feat. From the mortgage to the renovations to the home insurance, there are many things to consider and decisions to make when making your first home purchase. Here are eight tips on how to buy your first home.
Start Saving Now for Expenses Later
There are quite a few costs to consider when saving up to buy a home. You’ll want to consider the cost of the down payment, the closing costs and the move-in expenses. The cost of the down payment will depend on which type of mortgage you choose, and the closing costs are the fees and expenses you pay to finalize your mortgage. You’ll also want to have cash on-hand for move-in costs such as home repairs, upgrades and furnishings.
Increase Your Credit Score
Your credit score helps determine whether or not you qualify for a mortgage and it also can affect your interest rate. Before you purchase a home, you’ll want to be in the habit of paying your bills on time and keeping a low credit card balance. This will help you prepare financially for the responsibility of a home and will also strengthen your credit score.
Decide How Much of a House You Can Afford
With all of the costs to consider, it’s important to figure out how much you can afford before you begin shopping for a house. Not only will you have a monthly mortgage payment, but also property taxes and homeowners insurance premiums. While you may think your mortgage payment is cheaper than what you currently pay for rent, there are various housing expenses that can add up, often making it more expensive than you initially thought.
Shop Around for Loans or Mortgage Rates
There are a variety of loan types and payment options available, all with different eligibility requirements. You’ll have to consider whether you want a shorter term loan to lock in a lower interest rate or if you want a longer term loan with lower monthly payments. You’ll also have to decide whether you want an adjustable-rate or fixed-rate mortgage. An adjustable-rate mortgage has a varying interest rate, while a fixed-rate mortgage always remains the same.
Get a Mortgage Preapproval Letter
Getting pre-approved on a mortgage loan before your start house hunting will give you an idea of how much you can afford and how much the loan is going to cost. This will also show home sellers and real estate agents that you are a serious buyer.
Find a Good Real Estate Agent
Finding a good real estate agent will make your home buying experience a lot easier. Take referrals from friends and family, ask about their experience with real estate agents and don’t settle until you feel you’ve found the right one. A good real estate agent will take the time to understand your needs and budget as they search the market, and will help navigate the negotiation and closing process.
Negotiate with the Seller
If there are repairs needed on the house, you may be able to have the seller pay for the repairs in advance or lower the price of the house to account for the cost of repairs you’ll have to make. You can also ask the seller to cover some of the closing costs. How much power you have negotiating will depend on the market, but you’ll want to work with your real estate agent on a negotiation strategy.
Most Importantly: Protect Your New Home with Homeowners Insurance
Among all of the things to consider when buying a home for the first time, homeowners insurance is one of the most important. While it is often required by mortgage lenders, your homeowners insurance works as a financial protection in the case your house is damaged or destroyed. Especially as a first-time homeowner, knowing how much coverage you need or what you should be looking for isn’t always that simple.
At SelectQuote, we’re here to make shopping for homeowners insurance easy. We can help you through the complexities of buying home insurance by comparing top insurance carriers in just minutes. We can answer your questions, explain the details of your policy coverage, help you find home insurance discounts and more.