The First-Time Homeowner's Guide to Buying a House

 

The home buying process can be daunting for a first-time buyer. There are many steps to follow, and much to consider outside of those steps.

If you take it one thing at a time and keep these steps in mind, things will run smoothly, and you may even find the process an enjoyable one.

Save Early

There are several costs you will need to cover right off the bat when buying a house, so saving accordingly for them will ease the process from the start.

The down payment requirement on the home will depend on the mortgage type you choose and the lender you go with. Some conventional loans aimed at first-time homebuyers with excellent credit allow as little as 3% down.

Closing costs are fees and expenses you pay to finalize your mortgage, and they typically range from 2% to 5% of the loan amount. Often you can ask the seller to pay a portion of your closing costs.

Double Check Your Financial Situation

Your credit score will determine your qualification for a mortgage and dictate the interest rate lenders will offer. Keep your existing credit cards open, but keep the balances as low as possible. Be sure to pay all bills on time.

Seek out a home affordability calculator to determine your price range based on your income, debt, down payment, credit score, and where you plan to live.

Research Surrounding Properties

Any seller worth their salt will be asking “What is my home worth?” when listing their property to get an accurate estimate. However, some folks may bump up the asking price for a variety of reasons.

No doubt you will be doing a lot of research on the home you want. Be sure to take a look at the properties around the house you’re looking to buy to see how prices compare. If the home your looking at is valued at something astronomically high or oddly low, ask why.

Research Mortgage Options

Conventional mortgages targeted at first-time buyers require as little as 3% down. FHA loans are insured by the Federal Housing Administration and allow down payments as low as 3.5%.

There are specialty loans, such as USDA loans for rural home buyers that usually require no down payment. VA loans are guaranteed by the Department of Veterans Affairs and are for current and veteran military service members and usually require no down payment.

Mortgage terms also vary, such as a 30-year fixed-rate mortgage, which is paid off in 30 years and has an interest rate that stays the same. A 15-year loan typically has a lower interest rate, but the monthly payments are larger.

Look for Assistance Programs

Many areas offer first-time homebuyer assistance programs that can include low-interest-rate mortgages with down payment assistance, tax credits, or closing cost assistance.

Pick A Good Agent

Much like research on the home itself, you’ll want to do a deep dive on agents in your area who are experts at what they do.

Look up reviews and ask people you know for recommendations.