Many of our members' number one financial ambition is buying a home. For some, owning a home seems like an unattainable dream, but we are here to help you recognize that it is achievable and guide you to find the best solution for you. We are ready to help you achieve your goal from the first steps until closing and beyond. To help you break down the process, here are some essential tips for first-time homebuyers.
Assess Your Finances
Before you start house hunting, take a close look at your financial situation. Determine your budget by evaluating your income, expenses, and existing debts. Doing this will give you a realistic idea of how much you can spend on a home. It is important to talk to a mortgage specialist before you start looking for homes, as they can help you better understand your budget options. You don’t want to find a home only to find out it is out of your budget, or have it sold before you get to put in an offer. To get a general idea of what a monthly payment will look like, use our free mortgage quote tool.
Save for a Down Payment
Start saving for a down payment well in advance. While not necessary with low and no money down options, a larger down payment can result in better mortgage terms and lower monthly payments. If possible, aim for at least 20% of the home purchase price.
Check Your Credit Score
Your credit score plays a crucial role in securing a favorable mortgage rate. Check your credit score and work on improving it if needed. Pay off outstanding debts, avoid opening new credit accounts, and ensure your credit report is accurate. Here at Arbor Financial, we offer free credit checkups to help you understand your credit and learn how to make it work for you and improve it.
Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage is a crucial step in the home-buying process. It gives you a clear understanding of how much you can borrow and helps sellers take your offer seriously. Talking to a mortgage specialist could help you better understand your options, and they can answer any questions you may have while applying for pre-approval.
Define Your Priorities and Research Neighborhoods
Identify your must-haves and deal-breakers when it comes to a home. Consider features like: location, size, amenities, and work needed after moving in. Knowing your priorities will streamline your search and save you time. It is also important to research potential neighborhoods thoroughly. Look into things like: safety, schools, amenities, HOA, and future development plans. Take the time to visit the neighborhoods you're interested in to get a feel for the community.
Work with a Real Estate Agent
A qualified real estate agent can be your greatest asset in the home-buying process. They know the market, can negotiate on your behalf, and guide you through the paperwork. Choose an agent who understands your needs and priorities. Having an agent can also help you with tip three. If you don’t know where to start looking for an agent, many of our mortgage originators have relators they partner with, making the process even easier for you.
Consider Additional Costs
Beyond the purchase price, there are additional costs associated with buying a home. Remember to factor in closing costs, property taxes, homeowners insurance, and potential maintenance expenses. Being aware of these costs will prevent any financial surprises. Best practice recommends accounting for 7-10% of these costs.
Home Inspection is Key
Invest in an in-depth home inspection once you find a home you're interested in. An inspection will help uncover any potential issues with the property, giving you the opportunity to negotiate repairs or reconsider your decision. It is never a good idea to skip the inspection!
Don't Rush the Decision
Take your time when making such a significant investment. Don't feel pressured to decide quickly. Consider all aspects of a home before making an offer, and be patient in finding the right one for you. Talk closely with your realtor to make sure you are making the best decision for you. Don’t be afraid to work on negotiations with your realtor. Be prepared to compromise, but also be firm on your priorities.
Understand the Closing Process
Familiarize yourself with the closing process to avoid any last-minute surprises. Ensure you understand all the documents you're signing and ask questions if something is unclear. A smooth closing is the final step to officially becoming a homeowner. Here at Arbor, our mortgage loan originator will work closely with you and your realtor during the closing and will be a great, helpful contact person.
Think Long-Term
Consider your long-term plans when selecting a home. Think about your future lifestyle, family growth, and potential career changes. Choosing a home that aligns with your future goals can save you from having to move again in a few years and will make sure you’re in your dream home for a while. If you want to buy a home and feel you may move in a few years, consider talking to your mortgage specialist about an ARM mortgage.
Celebrate Responsibly
Once you've successfully closed on your new home, celebrate responsibly. Avoid making major financial decisions or taking on additional debt. Take the time to settle into your new home and gradually make any necessary upgrades or changes. It is also important to remember not to make any big financial purchases before the closing. Doing so can result in the home purchase not going through.
Buying your first home is a significant undertaking, but with planning and expert guidance, it is a rewarding experience. By following these tips, you'll be better equipped to navigate the complexities of the real estate market and make a well-informed decision that suits your needs and financial situation. For more information on buying your first home, talk to one of our mortgage specialists, download our free first-time homebuyer e-book, or click here to learn about mortgage options.
