10 IMPORTANT things First time Home Buyers NEED to know BEFORE getting a HOUSE
By Mrs. B Finesse
I can definitely tell you that buying a house is a great experience if, and only if you know what to expect. There are so many things people are not told about the home buying experience that could cost them losing out on the joys of owning a home if they are not prepared.
Here are some basics that new home buyers should know and be prepared to have in order before buying a house:
- Budgeting: Determine your budget by considering your income, expenses, and financial goals. Knowing this will help you understand how much you can afford to spend on a house. You want to make sure you do not get in a situation where you overspend on a house. This is key as most do not count the cost, once getting a home, on if issues can occur after purchasing the home. You may want to increase your income and be sure you make enough steady income to purchase a house.
- Down Payment: Save for a down payment, which is a percentage of the home’s purchase price paid upfront. The amount required varies, but a higher down payment can lead to lower monthly mortgage payments. There are different loans that can offer a lower down payment such as a FHA loan but make sure you understand what is expected when getting one of these loans as you will pay a charge monthly rolled in the loan called mortgage insurance, and FHA loans are less flexible than conventional loans.
- Credit Score: Check your credit score as it plays a crucial role in obtaining a mortgage loan. A higher credit score can help you secure better loan terms and interest rates. It is imperative that you work to get your credit score higher so that you do not come into problems when trying to apply for loans. Some companies will not approve you because of your score or you will pay a lot more over the life of the loan because of a low credit score.
- Mortgage Pre-Approval: Get pre-approved for a mortgage before house hunting. It shows sellers that you’re a serious buyer and helps you understand your borrowing capacity. Also shop around when you are looking to get pre-approved as the rate may vary depending where you acquire the loan: bank vs credit union. So you don’t waste time shopping for homes outside your budget, getting pre-approved upfront can tell you exactly how much you can qualify to get for the loan.
- Mortgage Options: Research different types of mortgages, such as fixed-rate and adjustable-rate mortgages, and understand their terms, interest rates, and repayment options. Fixed-rate mortgages are home loans that have an interest rate that’s set for the entire term. Adjustable-rate mortgages begin with an initial rate that’s fixed for a specified period; then the rate adjusts periodically for the rest of the term.
- Location and Neighborhood: Consider the location and neighborhood carefully. Evaluate factors like proximity to amenities, schools, transportation, safety, and future development plans. One KEY no one will tell you about location is the best time to observe a neighborhood is in the afternoon. At this time you can REALLY see how the neighborhood is as most people are home from work and school by this time.
- Home Inspection: Hire a professional home inspector to assess the condition of the property. This helps identify any potential issues. It also will verify the information the seller provides about the condition of the property and it helps the buyer discover defects the seller may not even know of at the time. Be prepared to pay $500 or more for an inspection.
- Closing Costs: Understand the closing costs involved, which typically include fees for appraisal, inspections, title insurance, attorney services, and more. Budget for these costs in addition to the purchase price. This is very important as many people do not realize the upfront costs that come before actually owning the house.
- Homeownership Expenses: Be prepared for ongoing expenses beyond the mortgage payments, such as property taxes, homeowners insurance, maintenance, utilities, and potential homeowners association (HOA) fees. For more information on this topic, watch my video “Unveiling 7 Hidden Costs of Homeownership” (HERE).
- Future Plans: Consider your long-term plans. Will the house meet your needs in the coming years? Assess factors like space, potential for growth, and the resale value of the property. Your family may grow so consider this when buying a house as you do not want to out grow a new home because of not planning. The resale value is also key as you want to make sure you are in an area that is expanding and increasing in property value.
Remember, buying a house is a significant financial decision. It’s advisable to consult with real estate professionals, mortgage lenders, and financial advisors to ensure you make an informed choice. They will help guide you to the best decisions in your future home owning needs.
Embrace the Millennial Finesse Mindset by being a proactive planner, taking control of your finances, and watching your savings grow steadily towards a brighter future with more money. Focus on Faithfully Innovating, Inspiring others, being Naturally Effective, and Seek Success Everyday!
Comment below What piece of Advice you wish you had known BEFORE buying your first home? Share one valuable tip that could help other first-time home buyers make a well-informed decision!