20 Tips for First Time Home Buyers

If you’re planning to buy a home for the first time, you’re probably equal parts excited and anxious about the experience. It’s a big deal making the leap to home ownership, but since your home will likely be one of the most expensive things you buy, there’s also pressure to get it right. And with all the different details to consider, you can quickly experience an information overload.

Here are 20 tips that will help you get through the entire homebuying process smoothly and end up in the home of your dreams.

1. Improve Your Credit Score

Higher is always better when it comes to your credit score. A good credit score not only improves your chances of approval on a mortgage, it also can help you secure a lower interest rate. Over the life of a mortgage, even a slightly better interest rate can make a huge difference. The best ways to boost and maintain your credit score are:

  • Paying everything on time or early for an excellent payment history
  • Keeping your credit utilization below 30 percent
  • Holding off on opening any new credit accounts when you’re planning to apply for a mortgage

2. Save a Sufficient Down Payment

The most common down payment is 20 percent of the asking price on the home. Although this isn’t required and the amount you’ll need to put down depends on the lender, you’ll pay private mortgage insurance if your down payment is less than 20 percent. Save as much as you can to hopefully hit that mark and because paying more upfront will result in more equity.

3. Figure Out Your Budget

Before you start looking around for homes, you need to determine how much home you can afford. It does you no good to fall in love with a home that’s out of your price range. Go over your budget and your income to figure out your price range on homes, as this will help you filter through your options, and you’ll need it when working with any Orlando real estate agents.

4. Check Out Assistance Programs

Certain areas have their own financial assistance programs that you could take advantage of as a first-time homebuyer. You could end up getting a loan with a low down payment or a tax credit, to name a couple potential benefits. Do some research to see if your city, state or county have any programs available.

5. Be Open to Different Types of Properties

It’s easy to get locked in on one type of property. Many first-time homebuyers are dead set on getting a house. Be open to other options, though, as you wouldn’t want to miss out on a great home just because it’s a condo or a townhome.

6. Consider Getting a Shorter Mortgage

The 30-year mortgage is a popular choice that works well for a wide range of people, but you could be better off getting something shorter. For example, if you get a 15-year mortgage, you’ll save a huge amount of money that you would have paid in interest. If you can fit the higher monthly payment in your budget, it’s worth considering.

7. Compare What Different Lenders Offer You

There’s no reason to assume that the first lender you talk to will give you the best deal. Check out at least three mortgage lenders before you decide on one, and make sure you’re comparing every aspect of what they offer, including interest rates and any extra fees involved.  Lower fees and lower rates should not be the only factor when considering a lender.  Realtors may have certain lenders they have worked with over time that they know they can trust and count on to deliver a successful transaction.

8. Get Preapproved

By the time you’re ready to make an offer, it’s good to have a preapproval letter from a lender, because this confirms the amount you can borrow from them. If the seller’s decision comes down to you and other buyers without preapproval letters, then you’re going to have an edge.

9. Choose the Right Real Estate Agent

When you’re meeting with Orlando real estate agents, it’s important to find someone who you get along with and has the market expertise. After all, you’ll be working with them quite a bit and trusting them to help you find and purchase a home.  You want to know that your real estate agent truly cares about you and your needs and is with you every step of the way, and not just wanting to make a sale.

10. Keep Your Future Needs in Mind

If you’re planning to live in this home for years, then you need a home that can accommodate your future needs. That could mean one or two additional bedrooms if you think you’ll start a family, or a suitable office if you’re planning to work more from home.

11. Perform a Thorough Inspection

There will obviously be an inspection done before you go through with any purchase, but you should also look closely at any home you’re considering when you visit. Check the condition of everything and keep an eye out for any strange smells or discolorations.

12. Don’t Get Hung Up on Minor Issues

Be careful that you don’t become overly selective in your quest to find the perfect home. Minor issues, such as painting that you don’t like, shouldn’t scare you off from a home that otherwise fits what you want. If you can change it without breaking the bank, then it’s not a big deal.

13. Research the Neighborhood

Do your homework on the neighborhood when you have a potential home in mind. Certain things about the neighborhood, such as its schools, may not matter to you personally, but they do play a role in home values. You should see what the neighborhood is like, if home values are trending up or down, and recent statistics.

14. Look at Homes Under Your Preapproval Amount

It’s best to give yourself some breathing room financially when buying a home. You don’t want to be stretched to your limit already when you purchase a home, as any sudden expense will have you in trouble. Try to leave a bit of a buffer between home prices and your preapproval amount.

15. Know How High You’re Willing to Go

When you like a home, it’s easy to let emotion take over and try to win a bidding war with other buyers. To avoid this, figure out the most you’re willing to pay for that home before you make an offer.

16. Be Strategic with Your Offer

Finding the right offer amount is tricky. You want to get the best deal, but if it’s a home with plenty of interested buyers, you also don’t want to go too low and get beat because of that. You’ll need to consider the situation and work with your real estate agent to come up with a good amount.

17. Remember the Closing Costs

Buying a home costs more upfront than just the down payment. Closing costs typically run you about 2 to 5 percent of the purchase price on the home.

18. See What You Can Negotiate

Just like you can negotiate the price on the home, you can also negotiate other things. Maybe you could get the seller to pay for a repair or cover a portion of the closing costs. Don’t be afraid to see what you can get and where you can save your money.

19. Have Money Ready for Repairs

Here’s another reason why it’s important to have money saved when you want to buy a home – you never know when you’ll need to get something repaired. Make sure you have an emergency fund ready just in case.

20. Don’t Forget About Insurance

You won’t be able to close the deal until you verify to your mortgage lender that you’ve gotten homeowner’s insurance. Just like with mortgage lenders, it’s wise to compare your options here and see which company will offer you the best deal.  Make sure you're comparing apples to apples as items such as sinkhole coverage may be in one home insurance quote but not another.

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