Homeowners: an elite club most of us want to be a part of. The dream of being a homeowner is more attainable than what you may think. Because of the misinformation, or sheer extent of available information, the whole process can seem confusing and daunting.
With help from these seven tips, you can tackle homebuying like a pro.
Take Your Time ... Then Act Fast
Let us explain. The idea of owning a home causes many people to jump into the game long before they are ready. They are already in debt, haven't done research when it comes to the market, and have not saved for a down payment. Don't let the allure of home ownership force you to make a move before you're ready. Here's where your grandma's advice "Get your ducks in a row" is very applicable. Thanks, Grandma!Get Free Quotes
Once you have determined that it is the right time to purchase a home, don't drag your feet. As soon as you have settled on a specific area you'd like to live, make every effort to see new listings within a few days. If you wait too long to look at a house, chances are it has already been sold.
Determine How Much House You Can Afford
And not in an "if I get a raise" or "if this new job hires me" kind of way. How much house can you realistically afford right now? Sometimes the answer is not much, and that's OK. Just look at it as more time to save for your down payment.
If a house is financially feasible for you, stick to your budget. What's one of the biggest mistakes first-time homebuyers make? Falling in love with a house that is out of their price range. Don't tempt yourself by looking at options that are not within your means "just to see what it's like." Chances are, you'll love what you see and will then compare all other homes to the one that will stretch you financially.
Don't let this get you down, though!
There is typically a "five-year rule" as to how long you should conceivably stay in a new home before selling it.
In 2018, the average duration of homeownership in the U.S. was 13 years. So even if your first house isn't the dream home you had envisioned or could afford, that doesn't mean you'll never get the chance to move up!
Don't Forget About Homeowners Insurance
Don't forget to factor in the costs of homeowners insurance into your calculations and money-saving endeavors! There are many different options when it comes to homeowners insurance, as well as various coverage options, so be sure to check out a variety of plans.
Insurance doesn't just protect you; it protects your lender as well. That's why it's required that those who do not own their home have homeowners insurance. Generally speaking, you would need to obtain a plan before closing on your new home, and definitely before moving in.
In theory, if you purchased your home in cash upfront and thus don't have a mortgage, you wouldn't be required to obtain insurance. It's probably a good idea that you do though, as it can significantly assist you should something happen to your home.
Save, Save, Save
Save for a down payment. Save for closing costs. Save for the unexpected expenses that come with the homeowner territory, like the need for new furniture, a washer and dryer, or unexpected repairs. A lot of first-time homebuyers don't realize that closing costs are separate from their down payment, which already leaves them in a financial pinch.
Closing costs may even end up being 5% of the loan amount! Your lender will let you know the exact price. Don't hesitate to get a line breakdown so that you can see just what your money is going to.
Shop Around. Then Shop Some More.
When it comes to mortgages, you want options. Multiple options can also set you up for negotiating success, as you may be able to pit lenders against each other. Don't take the first offer that comes along, as you have nothing to compare it to. Ready to get started? Easily compare mortgage rates here!
Will shopping for a mortgage hurt your credit? Sure, it will have a slight impact but if you shop around in a relatively short timespan, multiple credit checks from lenders will be recorded as a single inquiry. Remember, get those ducks in a row before getting started! Research carefully so you know just what your credit check window is for a single inquiry.
With a preapproval letter in hand, you show that you are a serious buyer. Because preapproval requires a lender to verify your information, it's a good indication that if you were to proceed with the loan, you'd likely be approved for it.
You wouldn't want to lose out on the perfect house because someone else had a preapproval letter and you didn't! Keep in mind, preapproval is different from prequalification. Many people prequalify for a loan; not as many are preapproved for one. We explain the difference here.
Make Sure All the Pieces Fit
If your dream home is in a part of town you don't like, or will greatly extend your work commute, perhaps it isn't your dream home after all. Before settling on a house, make sure you'll be happy overall, not just while inside.
To ensure a good quality of life, check out different areas, consider commuting times, look at schools in the area if you have children or plan on having them. All of these things should factor into your decision-making process.
Yes, it seems like an overwhelming amount of information to be aware of. To help make the entire process more enjoyable—as it should be, this is your very first house!—take it step by step. By tackling one thing at a time, your house buying endeavor becomes more manageable. You can take your time doing research and go at a pace you're comfortable with. Sitting down in one weekend and trying to answer every home purchasing question that comes along will leave you feeling burnt out.
Take your time and do your homework. When the time comes, all of the prep you've put into this over the last few weeks or even months will make it easier to not only secure a competitive mortgage but to find a home that you can be happy in!Get Free Quotes