Purchasing your first home is one of the big milestones that most people hope to achieve in their lifetime. When it’s finally time to take that leap, the house-hunting process can be exciting, and at times, overwhelming. Read on for our best tips for first-time homebuyers:
Start saving for a down payment.
While you might have dreamt about owning your own home for years, hopefully, you started a “nest egg.” It’s wise to start saving for a down payment before you even begin actively house hunting. It’s not uncommon to expect to put 20% down on a house purchase, but many lenders now permit much less, and first-time home buyer programs allow as little as 3% down. Play around with a down payment calculator to help you land on a goal amount. Some tips for saving for a down payment include setting aside tax refunds and work bonuses and setting up an automatic savings plan.
Choose an agent you like and trust.
You’ll be working closely with your realtor for the entirety of your house-hunting process, as well as throughout closing. Make sure you choose one that is experienced, reliable, honest, and knowledgeable about the ever-changing market. Since there will be no shortage of the time you will spend communicating with this person, it’s always important that you like them!
Explore mortgage options and compare rates.
Don’t make the mistake of getting a mortgage quote from only one lender, which can mean money left on the table. Comparing mortgage rates from at least three lenders can save you more than $3,500 over the first five years of your loan, according to the Consumer Financial Protection Bureau. There are a lot of mortgage options out there, each with their own combination of pros and cons. Make sure to thoroughly research to determine which mortgage option is best for your situation.
Research assistance programs.
In addition to federal programs like FHA loans, many states offer assistance programs for first-time home buyers with perks such as down payment assistance, closing cost assistance, tax credits and discounted interest rates. Your county or municipality may also have first-time home buyer programs so don’t be afraid to ask about programs you might qualify for.
Set a budget and stick to it.
Ideally, you should sit down and look over your finances to know how much of a monthly mortgage payment you can afford. When you’re approved for a mortgage amount, try to look at homes for less than the amount you were approved for. The pre-approved amount is the ceiling, and won’t account for closing costs or any unexpected expenses you might encounter after moving into the home. Shopping below your pre-approval amount will also help when it comes time to make an offer by giving you some wiggle room for bidding. The bottom line? Stick to your budget to avoid a mortgage payment you can’t afford. Sometimes unexpected life changes along the way, such as a job loss, a new child, or an unexpected repair will come up and you’ll be glad your monthly income isn’t completely tied up in a mortgage alone.
If you’re ready to enter the housing market as a potential homebuyer, consider reputable realtors Helen & Brad Miller. Helen and Brad Miller bring a wealth of experience and knowledge to real estate in Woodside, CA and the surrounding area. Explore our current listings here!