5 Stellar Financial Tips for First Time Homebuyers
Buying a home can be nerve-wracking — especially if you’re a first-time homebuyer. Not only is this the biggest purchase you will possibly ever make, but the home buying process itself can be filled with unfamiliar lingo and surprise expenses.
To make your first-time home buying journey a little less stressful, I want to give you my top five tips to help you navigate the process more smoothly and save money!
1. Start saving for a down payment early.
It’s common for people to put 20% down, but lenders often accept much less. Now, you can even get no down payment in some areas. However, the most popular amount averages at 3.5% with an FHA loan. An FHA loan is the typical first-time home buying loan. It’s important to keep in mind that any time you put less the 20% down you will automatically acquire PMI (Private Mortgage Insurance). There are ways of eventually getting this taken off, but, in the beginning, this will be an added cost to your monthly mortgage. Although 3.5% is significantly less then 20%, it can still be a hefty amount to save up for many. For example, a 3.5% down payment on a $200,000 home is $7,000.
A few tips for saving for your down payment could include setting aside your tax refunds, working overtime, getting side jobs, or setting up an automatic savings account. Get excited and track your progress! It can become a fun game to reach that goal!
2. Check your credit.
When you go to take out a home loan, your credit score plays a large part in whether or not you’ll be approved. Your credit score will determine both your interest rate and your loan terms. Keep in mind that you don’t need a perfect credit score to qualify for a loan. (Lenders can go as low as a 580 credit score!)
Although Credit Karma is not the most accurate, it can give you a good idea of where you stand. Some ideas for improving your credit score could be to pay down any debts, start making payments (if you’re not already) on your student debt, and — if you have no credit — open up a credit card that has no annual fee and make small purchases with it (just be sure to pay it off immediately after it hits your account).
3. Budget for closing costs.
Along with your down payment savings, you’ll also want to set some money aside for closing costs. Closing costs are typically all the fees that come with purchasing your home. For example, you will have lender fees, home insurance fees, home inspection and appraisal fees, title fees, and any other items that need to be prorated.
The good thing about closing costs is that these can be negotiated — meaning your real estate agent can request that the seller pay all or a part of the closing costs for you.
4. Negotiate, but also have a strong offer.
Once you find a home, it’s time to make an offer. When making your offer you want to go in strong. Don’t play around and lowball the sellers or you could loose out. Your real estate agent will help you with making the best offer, but be smart and reasonable when deciding what you’re going to offer.
A couple tips to keep in mind when deciding your offer are knowing how long it has been on the market, offering closer to the purchase price, asking for closing costs to be covered, looking at any issues that may need to be fixed, and — my all-time favorite method — writing a seller letter. A seller letter is when the buyer writes a letter introducing themselves, telling the sellers a little bit about who they are and what they love about the home.
5. Let the little things go.
When you’re looking at homes it can be easy to get caught up on details like paint color, fixtures, and flooring. However, these details are easy to change once the home is yours, so don’t let the little things get in the way. Don’t forget that Private Mortgage Insurance (PMI) will get attached to your mortgage if you can’t put that full 20% down. So, buying a home that needs some TLC/updating instead of your perfect dream home could save you money in the long run. Plus, by updating your home, you’ll earn equity in our home — which means you’ll be able to refinance with your lender and get that mortgage insurance taken off, therefore lowering your monthly payments!
I hope these five tips have given you some insight into financing for your first home. It’s never too early to get started! My name is Kylie Elliott and I’m a First-Time Home-Buyer Specialist and love what I do! I’d love to meet up with you and start putting together a game plan on how to get you into your first home!
About the Author:
FIRST TIME HOMEBUYER SPECIALIST, REALTOR®
928-848-8922 || firstname.lastname@example.org
Kylie specializes in helping people who want to purchase their first home someday that might be currently feeling overwhelmed, scared, underprepared, lost or uneducated. She’s passionate about guiding her clients through a journey that’s exciting, fun and super rewarding! Kylie believes you shouldn’t have to go through it feeling alone.
5 Stellar Financial Tips for First Time Homebuyers
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