Tips for first time home buyers
Many first time home buyers get caught up in the low inventory and the high demand of housing all made worse by the very tight availability of credit. In the market conditions such as these, even the simplest connections and tactics that you as a potential buyer can take advantage of can make a great difference in you getting the home you are wishing for. These are tips that can really help the potential first time home buyers to be able to navigate the market in the correct way.
Get to know just what you will be able to afford
When you want a new home, make sure that you know the total amount you are ready to spend on it and how much you can actually afford. It is important to calculate all the monthly payments and include things like homeowners association dues, homeowner’s insurance, insurance premiums and property taxes.
The down payment
You need to calculate the potential down payment. You will need 20% of the house cost available as a down payment. This is usually the norm within the industry. There are other options that you can weigh as well. If there aren’t adequate funds, then it is time to look at the available loan programs that are offered to different credit levels. Some programs even loan a percentage of the down payment.
It is always a great idea to work with some local agents. You need to select the area where you want to own a home and then connect with agents working in that area. It is important to be with an agent who has done extensive work within the neighborhood and one that has insight into local matters like new developments, schools and even taxes.
The preferred neighborhood
As first time home buyers, you need to know a lot about the area where you intend to buy a home. To get a clear picture, make a visit at different times, including late evenings, weekends and commute times.
As a first time homebuyer you will also need to get your credit ready. Buying a home can take a toll on your finances, so be prepared. Get your current credit reports and get any discrepancies fixed before approaching the lender.
You need to hold off on any kind of large purchases in credit. This is because such things can impact your debt to income ration and may affect the amount of loan you qualify for.
Down payment funds
Down payments eases the credit burden for most first time home buyers . This need to be budgeted for. Make sure that the closing cost funds and the down payment are made available before you close.
Rate vs. points
These need to be understood. With so many considerations when buying a home, the issue of points can be really confusing for the first time homeowner. The points are a fee paid to the lender in order to make sure that the interest rate is lowered. One point is usually equal to one percent of the amount landed. Consider your options carefully.
You should understand where exactly you stand with lenders. When your credit score is high, you will be able to get some low rates and also get a loan that is conventional. High rates may affect those with a lower score.
It may not be possible to have perfect timing. Just look for a home that you will love. When you wait, you may miss out on low rates, a perfect home or low prices.