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The 16 Ultimate Tips for First Time Home Buyers

Are you fed up with paying a monthly rent and constantly having to go house hunting? Then maybe it’s time you thought about purchasing your first house. We know – buying a house can be a nerve-wrecking experience, especially if it’s the first time. It’s probably going to be the biggest purchase of your life. The process can be complicated and full of unfamiliar language and expenses you didn’t expect.

We’ve compiled a list of the 16 ultimate tips for first time home buyers to make this process less stressful and help you save money on top!

Stage 1: Research

1. Start saving early for a down payment

It’s common to put 20 % down, however there might be lenders that accept less, maybe even as little as 3 %. But if you saved less than 20 % you will have to pay higher costs as well as a private mortgage insurance. Try playing around with numbers until you have a feasible goal amount.

2. Find out how much you can afford

Before looking at houses you need a general idea of how much you can generally afford. Use a home affordability calculator to get a good idea. Enter the down payment you are able to afford and a mortgage of 30 years. This will show you the price range you’re able to shop in. After you came up with this budget you should really stick to it.

3. Make a list of all your “must haves”

Before you start looking at houses you should make a list of all the features that you can’t do without – this can range from location, to square feet to amenities. This will also help your real estate agent to look for suitable objects.

Here is a list of ideas to give you an idea. However, what separates a “must have” from a “nice to have” usually depends on your own wants and needs.

  • An indoor fireplace
  • Easy to clean surfaces such as granite or quartz
  • Flexible floor plans that can be changed and adapted according to needs with sliding doors and movable partitions
  • Outdoor space such as a garden, deck or patio
  • Floor heating
  • Large loft space
  • A large garage with extra storage space 

You can certainly add most of these features after you purchase your house – although it will create more expenses on your end.

4. Check your credit score

Your credit score will be one of the key factors when you’re taking out a mortgage loan. So it’s good advice to check your credit score beforehand. If your credit score is low, you should be looking for opportunities to improve it, for instance repaying outstanding debts.

5. Don’t take out any new credit

Whenever you open a new credit account, for instance take out a loan on a car or get a new credit card, you run the risk of your credit score dipping. The day after you close the deal on the house you can apply for any card that helps you save money in making purchases as a new homeowner. But before that, don’t allow any creditor to so much as check your credit, let alone open a new account in your name.

6. Make a budget for closing costs

Not only will you need to save for a down payment, you also have to budget in closing costs – these can run between 2 % to 5 % of your loan amount. You can lower costs by asking the seller to take part of the costs or negotiating your real estate agent’s commission.

7. Save money for furniture and renovating

Sorry, but that’s not all yet. After down payment and closing costs you also have to take new furnishings, appliances, rugs, updated fixtures, a fresh coat of paint and more into consideration.

8. Compare mortgage rates

Comparing mortgage rates from at least three different lenders or more can save you a lot of money in the long run. On average you can save $ 3,000 or more if you compare mortgage rates and fees.

Stage 2: Search

9. Hire the right estate agent

You’ll be working closely together with your real estate agent, so it’s vital you have the right person for the job. The agent you want should be highly motivated, skilled and be able to listen and execute what you are looking for. They should also have good knowledge of the area in which you’re looking to buy.

10. Look at comparable homes online

Thanks to the internet and sites such as askalo, Streeteasy, Trulia and Zillow you can easily get an idea for how much comparable houses in the area have recently sold. This will give you an idea for the price range and your possible starting bid.

11. Choose the right neighborhood

Finding the right neighborhood is almost as important as finding the right house. Investigate into local schools, even if you don’t have children, they can still influence the value. Look at local safety and crime statistics. How close are the nearest supermarket, pharmacy, hospital? How long will your commute to work be? Look into the neighborhood on a weekday, on the weekend and during the rush hour to learn about traffic, noise and activity levels.

12. Focus on what really matters

Usually, you’re going to purchase an empty house. So don’t be distracted by great interior design, an art collection or the smell of fresh cooked food. Instead pay attention to room sizes, views, floor plans and kitchen and bath upgrades.

Stage 3: Offer

13. Make a strong offer

Think about how much over (or under) the asking price you’d be willing to offer, to get the house of your dreams. This is particularly true, if there are multiple bidders on the house. Talk to your real estate agent – they will definitely be able to help you.

14. Don’t go over-budget

In a competitive real estate market it can be likely that you will be bidding on houses with multiple offers. Even though it might be tempting to make a high bid that ensures you’ll win you shouldn’t give in. In the worst case, you might end up with a mortgage you can’t afford.

15. Always negotiate

A lot comes down to negotiation when purchasing a house and there is a lot of potential for savings there. Are there any major repairs on the house the seller could cover – either by handling them or by giving you a credit adjustment? Will the seller be taking over any of your closing costs? In a buyers market the seller might be willing to cut you a deal, to get the house off the market.

16. Pick your homeowners insurance wisely

The rates for homeowners insurance can vary widely, therefore you should shop around and find the best rate for you. But look closely at what is covered in your policy – a less expensive policy usually means fewer protections and more expenses on your end if you file a claim. Note, that your insurer can drop your property if they think it is not in a good condition. So be ready to find another insurer if they send someone over to inspect it. Flood damage is usually also not covered by homeowner insurance, so you might want to take out a separate insurance if you house is in a flood-prone area.

We hope you find these 16 tips useful, whether you are still thinking about buying a property, you are shopping around or you are ready to make an offer. If you want to learn more about the home buying process, you should check out 5 Facts about the Home Buying Process. All the best with finding the house of your dreams soon!

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