First Home Buyers Advice – Read This Or You Will Regret It

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Written By Adrian Cruce






Buying your first home is one of the most important things you will do in live. The process is oftentimes nerve-racking and there is a strong possibility you will feel overwhelmed by all that you have to do. You simply cannot buy the first property that you find and that you can afford.

Fortunately, there are ways to make better choices. All that you really need is information because this is why some make better choices than others.

Before talking about the advice that you should read before buying your very own home, remember that if you are short on time, the best thing you can do is to hire a buyers agent. For instance, a first home buyer in Canberra will know how to find perfect real estate properties for those located in Canberra.

Only consider the following tips if you have the time needed to actually use them. If you are in a hurry, they will not help you much.

Save Money For A Larger Down Payment

The common down payment is 20%. However, lenders sometimes allow you to put down a lot less. With first-time home buyer programs you are sometimes allowed to put down just 3%. The problem is that when you put down such a little amount, you end up paying a lot more on your mortgage insurance.

Use the Nerd Wallet down payment calculator to help you out. Try to save as much money as you can so that you can put down a larger down payment. If you do this, you end up paying a lot less on interest. This simple step allows you to buy a much pricier property. Alternatively, it at least aids in spending less on the one that you want.

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Explore All Mortgage And Down Payment Options

Most people think that all mortgages are the same and that all institutions offer the same deals. This is incorrect. In reality, there are numerous options available. Every single one has its own combo of advantages and disadvantages.

Besides conventional mortgages, look at what the government offers and do not forget about loans created especially for people in age brackets or specific situations. There are loan programs for veterans, students, and more.

Usually, the smallest mortgage rates are offered by the 30-year fixed loans. However, when you can afford a larger monthly payment, it is worth considering the 20-year plan or even the 15-year plan.

Adjustable-rate mortgage loans can also be taken into account. However, they are riskier. If you choose this route, opt for the one that offers a guaranteed low interest rate during the first years of the mortgage.

How Much Can You Afford?

Do not start looking for your dream home before you know exactly what is within your price range and what is not. Home affordability is a thing. If you cannot afford the home that you buy, you cannot really live in it.

Remember that when you buy a home, you have to think about maintenance costs, utility costs, and everything else that is related to home ownership. You cannot just think about the actual cost of the home or you might end up living in a home that you do not afford.

Improve Your Credit Before The Loan

Your credit is one of the most important factors lenders look at in order to determine whether or not you should be approved. It also directly determines interest rates and sometimes even loan terms.

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Always check your credit as early as possible in the buying process. If you identify errors, dispute them. Then, look for ways to improve credit scores, like removing debts. After you apply for the new mortgage, keep your credit score from going down by not opening a new credit account.

Get Preapproved

Every first home buyer should get pre-qualified for a mortgage. This offers a clear estimate of the money that the lender will offer when it is time to buy the home, all based on debts and income. However, as you get closer and closer to buying a new property, get preapproved.

A preapproval means that the lender goes through your finances to then confirm the amount that will be offered. This is done in writing, together with terms.

You need the preapproval letter because it shows that you are serious when you want to buy a home. There is a clear advantage gained over those buyers that did not get preapproved. Also, you get to speed up the process, which is very important because some sellers want to close the deal as fast as possible.

Hire The Appropriate Buyer’s Agent

As already mentioned, it is very smart to hire a buyer’s agent. You will be working really close with this specialist throughout the process. This is why you want to find a specialist that knows what he/she is doing and that you actually get really well along with.

The best agent is skilled, has a high knowledge about the local area, and is motivated.

Always Stick To The Budget You Calculated

After being preapproved, it is time to look for properties. Always find those that cost less than the figure on your preapproval letter. This is because that amount does not take into account the monthly expenses or various problems that might appear, like having a broken dishwasher.

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The real estate market is competitive and inventory is limited. Due to this, you will bid on houses that receive many different offers. After you find the home that you love, it is so tempting to make a higher offer because you want to win the auction. However, if your emotions take over, you can easily find yourself in a very bad situation.

Always shop under the preapproval amount. This offers wiggle room that you can use while bidding.

Don’t Forget About Move-In Expenses

First you save money for the down payment. Then you budget on closing costs. After that, it is time to create a buffer so that you can deal with what you have to after you are inside the house.

Few people expect to pay extra after moving in. Do not make this mistake. You will have to deal with some potential expenses, like new appliances, furnishings, paint, fixture updates, rugs, and practically all improvements that you will want to make.