Preparing to buy your first home can be exciting. For some, however, navigating the process-from searching for the perfect property to making the investment-can be daunting and overwhelming.
That being said, first-time homeownership is attainable, especially for consumers who are well-informed. To help you search for a new home with confidence, here are eight essential tips to remember.
Before House-Hunting
1. Check your credit
Before going house hunting, make sure to check your credit score and polish where needed. Your credit score will determine if you qualify for a mortgage and get you a better interest rate from lenders.
Three to six months before you reach out to lenders, we recommend reviewing your credit reports from Equifax, Experian, and TransUnion. Next, work to boost your credit score to 780 or higher by paying your bills on time, paying off any card balances, and disputing any errors you find on the report.
2. Set a budget
Another important step to take before house hunting is to make your own home-buying budget. While the mortgage is an option, it would help to crunch your own numbers and see what you're comfortable spending.
When calculating your budget, also consider one-time expenses, such as the down payment, closing costs, and move-in fees. Additionally, set some money aside for home repairs or upgrades, insurance and property taxes, utilities, and possibly HOA fees.
3. Get pre-approved for a mortgage
Mortgage preapproval does not mean prequalification for a home mortgage. It's a projection of the possible loan size you'll be able to get from a lender, which would serve as an invaluable talking point and could give you an advantage over competing homebuyers.
4. Check if you're qualified for down payment assistance
Some localities and regions offer down payment assistance programs for first-time homebuyers whose incomes are below a certain level or whose potential homes meet a specific threshold. Many of these programs pair homebuyers with state housing finance agency mortgages that can take the shape of a low-rate or forgivable loan.
5. Figure out the type of home you want
When you know your buying power, you can begin reviewing your ideal type of house and neighborhood. During this stage, we recommend considering the space you need, the cost of each type of home, and the type of neighborhood you want to live in. Are you looking to live in a district with top-rated schools? Do you want to live in a neighborhood where amenities are within walking distance?
Buying Your First Home
6. Hire a real estate agent
Now that you've got your financing squared away, it's time to take the next step in your homebuying journey: hiring a real estate agent. While it may seem unnecessary, hiring an experienced real estate agent could give you valuable insight into the neighborhood, the market conditions, and whether the homes you are considering are priced properly. They can also get you to see new listings that fit your criteria as soon as they become available.
7. Hire a home inspector
A crucial step in the home-buying process is conducting a thorough assessment of the property. Skipping this step may lead to expensive repairs and renovations that could have otherwise been avoided.
There are a number of homebuying red flags to look for when viewing the property, such as doors that don't close well or ceilings that sag. Hiring a home inspector can ensure that the property is structurally sound and that you are making a wise investment.
8. Negotiate
When you've found the home of your dreams, don't immediately pay the downpayment. Consider putting in an offer under the list price first or asking for concessions on home repairs or closing costs. If you're a strong candidate and the home has been on the market for a while, negotiating with the seller may help you score a better deal.
A for sale sign is seen outside new houses on a construction development on June 22, 2023 in Nantwich, England. The Bank of England has increased the base rate to 5% today, the highest rate since 2008.
