Buying a home is an exciting moment in anyone’s life, but it comes with its own set of challenges. No one just wakes up in the morning and goes to the market to buy a home, it requires time, patience, and of course Money! The buying process can be confusing but that’s what we have Real Estate Agents for 😉 However, if you are buying a home for the first time, it’s a whole different story.
As a first time house buyer, you probably have a lot of questions. When you’re buying a house for the first time, don’t make any impulsive decisions just because of “Real Estate Trends.” Take your time and make sure you actually buy your dream house within your budget.
We have put together some tips for first time home buyers to help you understand the process so you can get the results you expect.
Have a good credit score
Knowing your credit score is an important step when you are thinking of buying a home. Your mortgage lender will look at your credit score and with that he/she will determine what interest rate you are going to get and other costs involved on your mortgage loan. Remember that if your credit score is high the bank or the lender will consider you as someone that likely will pay the loan consistently and in a timely manner. If your credit score is low, most likely they will consider you a higher risk and will charge you a higher interest rate.
Have a good amount of savings: for down payment and closing costs
You shouldn’t consider buying a house if you don’t have 4 to 6 months of living expenses in your savings account. Here are some costs associated with buying a home for which you’ll need immediate cash for:
Down Payment:
The down payment of your new home largely depends on your loan and your credit score. If you have a great credit score, you could be putting a lower down payment and if it’s not too great you may have to pay a larger down payment. We recommend our clients to put 20% down because that will help them avoid paying the Mortgage Insurance Premium (MIP) which is an extra cost that you will have to pay for.
Closing Costs:
The closing costs include all the costs associated with the buying process like application fees, attorney fees, insurance fees, and much more. Usually these costs are about 2-5% of the price of the house.
Some lenders would also like to see some savings in order to grant you the loan. They want to see that you are well capable of paying your bills in case of an economic slowdown.
Research neighborhoods to find the best fit for you
There are many factors that come in when picking the right neighborhood to buy a house. First things first, what kind of lifestyle do you want? An upscale or a more relaxed one? A suburban style or a more urban lifestyle?. Research about “things to do in the area”, about schools, restaurants, parks, bars, etc. Make sure to look at neighborhoods within your budget.
Determine how much you can afford
Before falling in love with a house, determine how much you can afford. It is recommended that you budget 25% of your monthly take-home income for house related expenses like HOA fees, interest, loan installments, insurance, etc. For example, if you are taking home $5,000 a month, you wanna make sure your house related costs are under $1,250. It is recommended to use a 15 year mortgage with 4% interest rate to calculate your budget for the house.
Check/Bargain around for Mortgage rates to find the best one for you
There are many lenders in the market so make sure you are not taking the first offer you find. Shop around for a better mortgage deal to find the cheapest interest rate and more flexible mortgage options. Compare the interest rates, closing costs, and other details included in each option.
Check out if the lender offers discount points because sometimes, buying one discount point can help you reduce the interest rate by about 0.25% which will bring down the total interest on your loan by a significant amount.
As mentioned before, a stronger application gives you negotiation power so make sure when you apply for a mortgage you credit is great, you have low monthly debt and have a greater down payment if you can.
Pick the right Real Estate Agent
Picking the right Real Estate Agent is important because they are the ones who will be there with you from the first property showing to the closing of your new home! These days there are many websites where you can check the agent’s rating and sales history. Realtor.com and Zillow are good examples for checking the sales history of the agent plus read the reviews, see what the clients are saying about the agent. Check their Google reviews and their social media, check how active they are.
Check all your options for homeowners insurance
When looking to buy a homeowners insurance policy, a lot of the people simply go for the company that they currently use for their car insurance. However, that is not always the best choice. One of the first things you should do is ask around different companies about what kind of coverage each company offers and the prices. You should also make sure that you are asking for discounts, particularly if you have the option to “bundle” with your car or any other insurance. Many times, companies don’t advertise these discounts but they have many options available. Last, but not least you should also look at the customer satisfaction ratings of that company.
Have a great Real Estate Attorney
Real Estate Contracts are usually full of legal jargon and its difficult for an average human to understand all the legal language. In the state of New Jersey, hiring a real estate attorney is recommended by the state Attorney General. Your attorney will explain the legal process of buying a home, will answer any questions that you may have about the contract and will do all the legal negotiations with the seller’s attorney in order to protect you and the purchase of your home. Make sure you hire a “Real Estate Lawyer” and not just any lawyer. There are many details that only Real Estate Attorneys are used to and these professionals know how to resolve issues like home inspections, septic tanks, oil tanks, etc. Having a good Real Estate Attorney would give you that bargaining power when it comes to legal negotiations
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My husband and I are planning to buy a house, which is why we’re currently looking for a transaction coordination service that will help us with reports and repair negotiations. Well, thank you for informing us that 20% is needed for the downpayment. I’ll also keep in mind to discuss with my husband the cost of application fees, attorney, and insurance fees.
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20% is not a definite amount but a recommended amount you should have prepared 🙂
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I liked it when you mentioned taking your time to check out the neighborhood to identify the amenities that are available around there. Since I am getting married soon, I am thinking to move to a new place that is suitable for new couples. I will keep in mind to find a neighborhood that has great amenities that can be beneficial for me and my future wife.
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🙂
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I think you make a great point when you explain how you should set aside 25% of your monthly income in order to afford any additional house fees. My wife and I are interested in finding an affordable house since we are planning on having our first child next year, but we are worried that our budget may be limited since my wife cannot get a job while she is pregnant. Maybe we should consider our needs as we look for a property.
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Totally 🙂
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I’m glad you explained why we need to pick the right real estate agent. In my opinion, it’s also a good idea to have a title search done when buying a home. This will help the home buying process go as smoothly as it can!
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I think you make a great point when you explain the importance of determining what type of lifestyle you’re interested in having so that you can find a house that is in a good location. My brother is interested in using the money he inherited from our late aunt to invest in some property, but he needs to find a house that will allow his son to walk home from school if necessary. Hopefully, he can find a seller that can offer the perfect home for his family.
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Mark, I agree with you that it is essential to choose a reputable real estate agent because they will help you through the entire home buying process. I would imagine that it would be just as important to invest in a reliable title agency to make sure that the process is done correctly. My sister and her husband are hoping to buy a new home this year, so I will be sure to pass all of these tips along to them.
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I like that you mentioned the importance of considering your lifestyle in order to find a home that suits your needs and aligns with your price range. Now that my wife and I have decided to have our first child this year, we would like to find a home that is near a good school, but we’re that our budget may be limited since my job is our only source of monthly income. Maybe we should consider our priorities as we search for a property.
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My sister would like to buy a residential house this year, which is why she’s thinking of hiring a lawyer that may help with her mortgage application. Well, it’s a good thing that you clarified here the importance of allocating 20% for her downpayment. I’ll also keep in mind to tell her that she must check its neighborhood thoroughly before making any final decisions.
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I think it’s great that you mentioned how you should keep your price range and desired lifestyle in mind so that you can choose a home that is in a location that suits your needs. My wife and I have been thinking about buying a home after we retire this summer, but we would like to find some affordable property near a golf course since we enjoy spending the majority of our time outside when the weather is warm. We will consider our particular needs as we search for a property.
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I am thankful that this post shared that it is important for us to consider our credit score when we want to buy properties. My sister mentioned she wants to buy an apartment. I will remind her to look at her credit score prior to making any purchase.
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It’s great that you talked about how it’s important to look for a real estate agent with positive reviews. Recently, my sister said she’s ready to buy her first house. She’s excited to find the perfect one, and I think this article could help ease the process. Thanks for the tips about what to expect during a house purchase.
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Thanks for explaining that there are a lot of websites that can help you find a good real estate agent. My wife and I hope to finally move out of our apartment and find a small home to live in. We will start checking websites so we can find a real estate agent who can help us find a small home in our current area.
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Thanks for reminding me that I should have a good sense of what I can and can’t afford. I’m planning on buying a house since it sounds like it would be a good investment for me. I’m going to follow your tip about picking the right real estate agent so I’m going to start looking for one soon.
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I appreciate you mentioning the importance of hiring the right real estate agent when buying a home. My husband and I want to buy our first home. We will be sure to find a reliable real estate agent to help us.
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I think you are right about assessing the interest rate of the market. I need to get a new real estate agent to find a house for me in Miami. I’m moving there for my new job and need something quick.
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I appreciate that this post highlighted that when looking to buy a new house, it is important for us to hire a trusted and reliable real estate agent. It makes sense as in doing so, we will be under proper counsel. I will definitely remember to adhere to your advice if I plan on buying a house.
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It was really informative when you mentioned that it is a good idea to budget 25% of your monthly take-home income when you are looking to purchase a home. Would it be a good idea to look at modular homes when you are looking at what is available in the market? I would imagine that it could be a good idea to look at modular homes because they might be more affordable.
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My parents have lived in their current home for over twenty years, and they hope to buy a new home before the end of the year. Thanks for the advice to check reviews online for real estate agents in order to find a good agent. I’ll tell my parents to check reviews online as they start their search for buying a new home.
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Building your savings account now is important because there are many expenses you will need to pay for throughout the homebuying process.
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I liked your suggestion to look around and different mortgage rates. My son is looking to purchase a house in the next year or so. I’m sure that if he looks at a few different mortgage rates, he’ll find one that works best for him.
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I like how you mentioned that you shouldn’t consider buying a house if you don’t have sufficient savings. My aunt mentioned to me last night she is planning to buy a new home but she doesn’t know where and how to start finding one and asked if I have any idea what is the best option to do. Thanks to this informative article and I’ll be sure to tell him that it will be much better if we consult a real estate professional that can help us find her desired new home.
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I like how you mentioned that buying a home comes with its own set of challenges but is an exciting moment in everyone’s life. My uncle mentioned to me last night he is planning to buy a new home that has sufficient space for his desired backyard and asked if I have any idea what is the best option to do. Thanks to this informative article and I’ll be sure to tell him that it will be much better if we consult real estate services as they can answer all our inquiries and for him to be able to choose his ideal home.
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As a first-time homebuyer, rely on your real estate agent’s advice to determine how much you should offer.
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I will try not to make an impulsive decision when buying a house. Maybe I can get help from a professional. That way I can get a house without making a big mistake.
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Thank you for explaining that picking the right real estate agent is important because they are the ones who will be there with you from the first property showing to the closing of your new home. It’s my friend’s first time buying a home so she has no idea about the course of action she should take. I think it’s best for her to hire a real estate agent that can provide her with a wide selection of homes for sale.
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I’m glad that you talked about when choosing to buy a homeowners insurance policy, people simply go for the company that they at present use for their car insurance. My father mentioned to me the other day that he will be buying a new house after his retirement. I will be sharing this post as his reference in looking for Active Retirement Properties.
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Thank you for explaining that you should check out a few different lenders so that you have a full idea of your options. I’ve been wondering what kind of advice I can share with my daughter as she starts looking to buy her first home. I’ll have to mention this, since I’m sure that it would be best for her to have a good idea of what kind of options are available to her.
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I appreciate what you said about investigating the neighborhood first. That seems like a good first step in knowing whether or not moving there is worth it. I’ll have to hire a real estate agent to help with the search.
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Buying a home for the first time can be both exciting and overwhelming. This post provides practical tips to help first-time homebuyers navigate the process successfully. From getting pre-approved for a mortgage to considering the location and the home’s condition, these tips can help you make an informed decision and find the perfect home for your needs. If you’re a first-time homebuyer, this guide is a must-read to ensure a smooth and successful buying experience.
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I found this blog post on tips for first-time home buyers to be incredibly helpful and informative. The author provides a comprehensive list of eight essential tips that can guide individuals through the often overwhelming process of purchasing their first home. From setting a realistic budget and getting pre-approved for a mortgage to conducting thorough inspections and considering resale value, these tips cover all the important aspects to consider when entering the real estate market. As a first-time home buyer myself, I appreciate the practical advice and the emphasis on being well-prepared and informed throughout the journey. This article is definitely a valuable resource for anyone embarking on their first home-buying experience.
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