7 Tips For First Time Home Buyers
7 Tips For The First Time Home Buyer
7 Tips For The First Time Home Buyer
Now is the right time to buy your first home. Yes, now. Interest rates are at historic lows and so are house prices. Right now you can get more house than you could have six months ago. And yes, you can get a loan.
Buying a home can be intimidating. Everyone gets the jitters when they sign on the dotted line and realize exactly how much money they are promising to pay back over fifteen, twenty or thirty years.
Remember your first car loan? Yeah, it's like that, but more intense. But in the long term buying a home now is an excellent investment.
So here are some tips to prepare you for this adventure. Consider it like packing. You want to make sure you have everything you need before you get to the closing table.
1)Find out your credit score. Honestly, your score needs to be between 640 and 720. Some lenders may qualify you at 620 but you will pay a much higher interest rate. If it's below 620, work on improving it. There are websites, books and financial counselors to help you with that.
2)Consider a mortgage broker. They are the experts who can walk you through the legal-ease and explain what you can expect. They will work hard to get you the fairest loan possible.
3)Look at your rent. The landlord has not lowered it, right? The prices of rent are going to be higher because you're not only paying the landlord's mortgage, you are giving him a profit base to supplement his income, offset any repairs, etc. If you are paying $1,000 a month in rent, that is $12,000 a year. In five years that will be $60,000 going into someone else's pocket and they are getting the tax credit for it, not you. For just a few hundred dollars more you could get out of that apartment and into something that belongs to you.
4)Pre-qualify. Know what you can afford before you look. Work out how much money the bank will be willing to lend you, what down payment you'll need, and how the house price translates into monthly payments. Don't get your heart set on $250,000 houses if you can only qualify for $190,000. General rule of thumb is your monthly payments (including utilities and insurance) should be no more than one-third of your monthly income.
5)Make a list. Decide what the most important things are. Is it a garage? Three bedrooms? A big yard for the kids and pet? Sure, everyone wants the granite counter top, steel appliances and hardwood floors. But look at the essentials you need, not the wants. It will be your house. Down the road you can make the cosmetic changes.
6)Surround yourself with professionals. Do not try this on your own after reading an e-book. Be wise and pay for a great real estate agent and home inspector who know the ropes and can help you through the process. They know the potholes and blind curves along this road.
7)Look at the "bones". Take notes and pictures. Write down the pros and cons of each house you look through. If there is something you really cannot stand, you won't "get used to it" in the next year, or five or thirty. Go with your gut. You will know when you walk into "your house".
8)Get a home inspection. Every house, no matter the age needs to be inspected. Roofs and furnaces do not last forever. Expect little things to be wrong that can be negotiated, but do not set your heart on a place without having a professional go over it with a fine tooth comb.
Now you have your battle plan. Go find your home! Do it now, before the rates go up and the prices start climbing. Sellers are motivated. It is likely you can negotiate to have them pay all if not most of the closing costs because not already owning a home that has to sell, you can close fast.
Forget the news media reporting. Your first home is out there waiting for you to walk in its door. Go find it before someone else does.
by: Ken Compton
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