Being a first-time homebuyer is exciting, but at times it may also feel overwhelming. There is so much to do and a lot of information to understand as you tackle the process. If you are a first-time buyer and have questions about the process, do not hesitate to reach out to Kimberly Addelman and her team at Village Home Sales. To get you started, here are 5 tips to help you start navigating your way through the process!
Start Saving Early
– Although it is very common to put down 20% or more when purchasing a home, many lenders now allow much less, and first-time homebuyer programs allow as little as 3% down. Even though you can
put less down, you may have higher costs, need to pay mortgage insurance and a small down payment can still be a substantial amount. For example, on a $200,000 home, 5% down is still $10,000! You will want to start saving as early as possible which you can do by putting aside your tax refunds, setting aside some money from each paycheck, or setting up an automatic savings plan through your bank
Save for Closing Costs
– On top of the down payment, you will also be responsible for closing costs before the house if yours. On average, closing costs are 3-4% the purchase price of your new home. Your lender will give you a more precise number, but closing costs pay for the appraisal, the home inspection, a credit report, your attorney, and insurance.
Apply for a Mortgage Before Searching for Homes
– You should know what amount you are preapproved for from a lender before you start looking at houses. Not only does getting a preapproval let you know how much of a loan you can obtain (meaning how much you can spend on a home) it lets prospective sellers know that you’re a serious buyer, which is a great way for first-time homebuyers to get ahead in a competitive market.
Explore Your Mortgage Options
– There are many different types of mortgage options out there including conventional, FHA, and VA.
- Conventional - Conforms to standards set by government-sponsored entities Fannie Mae and Freddie Mac. Require as little as 3% down.
- FHA loans - Loans insured by the Federal Housing Administration permit down payments as low as 3.5%.
- VA loans - Loans guaranteed by the Department of Veterans Affairs sometimes require no down payment at all.
Be sure to speak to different companies to see who will provide you with the best rate and what type of mortgage will work best for you.
Start Looking at Homes!
– Your real estate agent will put in MLS (multiple listing service) searches based on your preferences and desires. The MLS is created, maintained, and paid for by real estate professionals and it can really help first-time homebuyers view the largest pool of properties for sale in the marketplace. You can also start browsing homes online that fall within your budget and when you find homes you like, be sure to send them to your realtor so you can schedule showings.
Interested in purchasing your first house? Call the team at Village Home Sales today!