Purchasing a home for the first time can feel quite scary. There's so much you don't know, but you need to understand some things to get this right. The following are five things first-time homebuyers must know.
Obtain the Down payment
The first thing you need to know if you're going to be buying a home is how much you're going to need as a down payment. Read any good home buyers guide and it'll tell you that getting over this hump is one of your biggest steps forward. Most homes are under $500k, and the law says your down payment for a house valued that high or lower needs to be at least five percent.
This means your down payment could be higher, so it's always best to save as much as possible so that the down payment doesn't hurt you too much. If you're planning to purchase a home, then make sure you're budgeting to cover these initial costs.
Get the Mortgage Pre-Approval
The next thing you have to do is get pre-approved for a mortgage. There are several potential lenders you can work with, but it's best to choose a financial entity you have a relationship with. The reason you're getting the pre-approval before you start looking for a home is to see what you can afford.
Ideally, you've already done some budgeting and know how much you're willing to spend monthly to pay off your mortgage, but the pre-approval gives you more concrete numbers. You'll know what you qualify for so that you know which types of houses are available to you. Doing this will lock in interest rates, which is a good thing, too.
Consider the Lifestyle
Your lifestyle has to blend with your home. This is sadly something some first-time homebuyers overlook, but it's important. Just because you love a home doesn't mean it's the right one for you. For example, if you happen to love running throughout the week but there's no park or trail nearby, then this may not be the house for you.
Think about the things you must have near you when you're buying a home. Some folks want to be close to shopping centers, while others want to be close to downtown. Maybe you're hoping to have great schools nearby for your kids. These are questions you want to answer before you start looking for a home.
Look at the Floorplan
First-time homebuyers need to pay attention to the floorplan. It's not wise to just buy a home because of how it looks and not consider how it's going to meet your needs.
For example, if you and your partner wake up at the same time and usually have to rush to work, then you might need two restrooms or at least a bathroom with two sinks. If you're planning to have kids or already have a few growing kids, then each child needs their own room. If you want to have a gym or home office, then you'll need a few extra rooms for that, too. Look for a home that will fit your future and present needs.
Get Ready for the Closing Costs
Some first-time homebuyers overlook closing costs and end up scrambling to make enough money to deal with these costs. If you don't prepare for them, it can be a pretty stressful time after everything you've done. The house is almost yours, but then these costs come out of nowhere, which is why you need to prepare for them now.
There's going to be legal fees for the lawyers who assist with the purchase, which could cost $1,000. You'll also have to pay for a home inspection that could be a few hundred dollars depending on who's hired. You may decide to have other inspections that will add to the cost. The insurance you'll need to purchase can be costly as well. Prepare for these costs as soon as possible.
Now, you know five things that first-time homebuyers need to know, but there's always more. Ask questions, spend time reading guides, and do as much as you can to prepare before making your purchase.
