11 Tips for first-time homebuyers

Buying your first home can be stressful, so be sure you’re ready.
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by Kat Sarmiento

Buying your first home is a big step, but you have to make sure that you’re ready for it. To save you some heartaches, mistakes, stress, and worries, here are some tips for buying your own home.

1. Get your finances ready.

Before you start really hunting for a home, you need to have enough money for it. Keep in mind that there are several other things that you need to pay for, such as closing costs, down payment, and move-in costs like repairs and upgrades.

2. Mortgage or cash?

Buying a house through a mortgage and buying with cash each have their benefits. Paying with cash is good if you want to get rid of other fees such as the interest rates and closing fees. Paying with cash is actually preferred by sellers, as chances are unlikely that the buyer will back out due to not getting financial approval. Cash also may mean that the buyer can get the property lower with cash discounts.

Paying with a mortgage on the other hand can give you financial flexibility in case a problem emerges. There are also tax benefits for those who itemize their deductions, and in some cases, protect you from creditors.

3. Get your pre-approval letter.

If you’re buying your home through a mortgage, get your pre-approval letter before house-hunting. A pre-approval letter is proof of how much loan money you can get based on your financial information; this can help you with closing a deal.

4. Don’t mess with your credit.

Don’t open a new line of credit, take out a new loan, increase your credit balance, or make late payments—this can all risk your final approval.

5. Explore your options.

There are several options for taking out a mortgage loan. Some of them are:
• Conventional mortgages – these are not by the government. Some target first-time buyers with a 3% down payment.
• FHA loans – these allow down payments as low as 3.5% and ire insured by the Federal Housing Administration.
• USDA loans – these are for buyers of rural homes and do not require down payment.
• VA Loans – this is for current and veteran military service members and usually don’t require down payment.

In addition to these, you also have to think if you want a 30-year or 15-year mortgage. In a 30-year one, you can pay it off in 30 years and the interest rate stays the same. In a 15-year one, it usually has a lower interest, but the monthly payments are higher.

6. Look for first-time homebuyer programs.

City and housing agencies can help lower the costs with first-time homebuyer programs. They can provide payment assistance, and even cover some of the closing costs. For guidance, reach out to your real estate agent or your local housing department.

7. Compare rates.

Before settling on which loan you’re getting, compare their rates. List down three to five lenders and compare the total cost of the loan, annual percentage rate, and additional fees.

8. Get a real estate agent.

You can still choose to do everything on your own but having a real estate agent can save you some work. They can negotiate, schedule tours, vet neighborhoods and houses, deal with contracts, and so much more.

9. Home inspector.

Home inspectors can tell you what specific problems the property has, what needs to be repaired, replaced, or dealt with. But standard inspection might not include things like molds or pests—make sure that you know what is included and what other inspections you might need.

10. Negotiate with the seller.
To drive the costs lower, you can ask the seller to pay for the repairs or to lower the price for the repairs that you’ll have to make. You can also ask them to pay for some of the closing costs, but some lenders might limit the amount that the seller can pay.

11. Property managers.
If you want to rent out your home, a property manager can help you deal with your landlord duties. They can find you tenants, collect monthly rent, deal with repairs and maintenance, and even do accounting work for you. They can help you save time and energy.

However, you can do the accounting and bookkeeping work by yourself if you’d like. There are services that can help you manage your books, so you can focus on your property.

Buying your first home really takes a lot of work, but if done right, it pays off well. At the end, you’ll have your own space, free to do whatever you want.