Are you going to buy a home soon? The process can feel overwhelming, but the more you know about it, the more confident you’ll feel. Five essential tips can make buying your first home a lot smoother.
We put together this list to help you through the process. Keep reading if you’re ready to learn more about getting a new home. Let’s begin!
1. Work With a Knowledgeable Realtor
First, you’ll want to make sure that you hire an experienced and trusted realtor. The seller pays the cost for the realtor, so you shouldn’t have to worry about it as a buyer. A trusted realtor also works for you- they protect your interests and act as reliable guides through the buying process.
If you go with a listing agent (the one the seller hires), they’re much less likely to consider your needs and won’t protect your interests very well. Working with your own realtor ensures you have a better experience and a fair price for the home.
An experienced realtor will also help you negotiate the price and work through home inspections. You’ll want to choose a trusted real estate agent in your area. Make sure to research them to ensure they’ll have your best interest in mind.
2. Always Negotiate
There’s tons of paperwork involved in buying a home. We tend to believe that we can’t negotiate when we see a written contract. However, that’s not true- you can always negotiate on a home purchase.
Negotiation can work out for you and the seller. They’ll sell the home much faster, and you can work the price down to an offer you’re more comfortable paying. It’s a good idea to work with a realtor for the negotiations process- they can offer invaluable information and do the work for you.
In short, don’t think that you can’t negotiate because it’s on paper. You aren’t bound to anything until you sign. So, until then, feel free to explore all of your options.
3. Buy a House You Can Afford
Next, only go for the houses you know you can afford. There are many cases where lenders approve you for a much higher loan than what you need to spend. If you expect your income to drop in a few years, you’ll need to consider that too.
You don’t need to use the entire loan you get approved for. Instead, use only as much that you know you can afford. You won’t want your monthly mortgage bills to become unmanageable!
A slightly less expensive house means you can still make your payments, even if something changes. Many lenders recommend striving for a monthly bill that’s 28% of your gross income. That way, you can also pay insurance and taxes on the home.
So, just because you get approved for a huge loan, you don’t want to buy a house that you can’t afford to make payments on later.
4. Consider a VA Cash-Out Refinance
In a VA cash-out refinance, you replace your current home loan with another that has different, better terms. You can use it to take cash out of your home’s equity, allowing you to spend the money on your other needs.
It works by giving you a bigger loan than your current one. However, you receive the difference from what you’ve already paid in cash. Many people use this option when they want to remodel their home or have other large expenses.
When buying a home, you’ll want to keep this in mind for later. You want to buy a house that makes it easy for you to build up equity. That way, you can access it later through a cash-out refinance.
To summarize, you should consider how long it’ll take to build up equity in the home you buy. It’s a great financial option for many people, so you’ll want to consider it in the future.
5. Don’t Forget About Your Other Debts
Next, you mustn’t forget about your other debts when getting a loan to buy a new home. For example, if you have student loans, you want to ensure you can still pay them off while working on paying the mortgage.
If your student loan is in deferment, you’ll want to sign up for an income-based repayment plan. When you do, you’ll have the documentation to show a lender that you can make the payments. The lender will want to know more about your debts, so you’ll need to gather all the paperwork they want.
Getting a less expensive home will also give you enough room to work on your debts. You won’t have to choose between paying your debts or your mortgage down the road.
Because of this, you must work out a budget before buying a home. How much can you afford to pay on the house each month while still covering your other expenses?
Overall, don’t forget that you must factor in your monthly costs. These include various debts and essentials.
Impact of Your Credit Score
Your credit score will impact your ability to get a mortgage and determine how much money you qualify for. You can easily check your credit score online. If you see anything wrong in your credit report, you can contest it for a better score.
Making on-time payments with your debts also deeply impacts your credit score. You’ll want to ensure you always pay on time, especially when preparing to buy a home. The higher your score when you apply with lenders, the better your odds of getting a good rate are.
Don’t Buy If You’re Not Ready
You shouldn’t buy a home if you’re not ready. You can always talk with realtors and financial experts to determine how you stand. As soon as you’re ready, the housing market will be there- there’s no rush to buy a home right now.
Overall, you can have regrets if you rush into buying a house. Take your time researching and saving to make the process easier on yourself.