If you ask your friends and family, you can get all kinds of advice on how to buy your first home. The internet will also be full of advice. Some of it is good, and some of it is not so good. There are so many things you must know about and understand that it would take a book to cover it all.
The good news is that you can find the information here and there through research. But, before you start diving into that, there are some first-time home buyer tips and advice that must be read. Things that can make the entire process much more manageable.
- Budget – Before purchasing a home, you must have an accurate budget. If you do not have one, download a free template and make one. You need to know how much you can afford to spend on a home loan unless you have the money to buy it outright. You also need to keep in mind that there will be closing costs that you need to come up with, such as lawyer and real estate agent fees, inspection fees, and banking fees.
- Down Payment – The lender you plan to go through will want you to have some money to put in as a down payment. The average amount they will request will be around 20%, but some lenders will allow as little as 5% of the home value. When saving, aim for the higher amount because the more you put down on the house, the smaller the payments will be on the mortgage.
- Credit – Your credit number will be one of the first things a lender will look at. Anything that has to do with the financial aspects of a business transaction will rely heavily upon this number, along with the credit history attached to it. You want your number to be as high as possible, but it should be at least 700. If it isn’t, do what you must to get it up to that level before you attempt to get a mortgage. There is not much you can do about credit history unless you have been building it for a few years. What this will tell the lender is how long you stay at a job and at a residence. It shows whether you are stable or like to jump around through life.
- Preapproval – You should always get pre-approved for a first home buyer loan before you start looking at homes. If you cannot get a loan, there is no point in getting your hopes up until you can. Plus, you will know how much money you get on a loan when you get set up before you start looking. This gives you a high limit for houses that you want to look at. Once again, do not forget to factor in the closing costs associated with any home purchase.
- Loan Options – You may have many different loan options available, so go over them with your lender. If you are planning on going through one of the online lenders, you will need to take the time to research them all, so you know which one will fit your needs the best. And which is the right choice for your specific circumstances. If you have any questions, get ahold of a professional to help guide you through the loan process. A lawyer can help a substantial amount, but it will cost you.
These are five of the most essential things that you need to know when you are planning to buy your first home. This is not a process that you should jump into without any planning. It is an idea that you should have put into play years ago. The most important thing you can do when you turn 18 is to build your credit rating up as high as possible without going into a ton of debt. The most helpful tip that can be given to you is to start before you actually begin.