Buying a home is one of the most exciting (and nerve-wrecking) experiences you can undertake. With so many considerations, including the location, your credit score, saving up for a down payment, finding the right mortgage lender, and more, it’s common for home buyers to overlook important details when buying their first home.
Additionally, with so many unique home loans available, such as VA loans or home loan for first responders, you want to make sure you’re getting the right loan for your specific needs and goals.
Here, we’re taking a closer look at the journey to becoming a homeowner. First, we review some of the benefits of home ownership (as compared to continually renting and throwing away your potential for building equity) and then shift to looking at things you should know before buying your first home.
When you approach the home buying journey with a clear plan, thorough research, and sound financial advice, you’ll find that buying a home doesn’t need to be as challenging as many make it out to be.
Before you know it, with these tips and a sound plan, you’ll be sitting back and relaxing in your new home.
Compared to renting, there are many reasons why so many individuals and families are eyeing the prize that is home ownership. But why exactly is this shift to owning so attractive for so many individuals?
Some of the most prominent benefits to owning your own home include:
· A good long-term investment.
· Build wealth and equity instead of throwing away monthly rent payments.
· Take advantage of low interest rates.
· Many federal tax benefits.
· Stability and security.
5 important things to consider before buying your first home include:
1. Save up For Your Down Payment and Closing Costs: while some loans, such as a VA loan for military veterans, may not require a down payment on your house, it’s still a good idea.
Essentially, the more cash you can provide up front the better as this will reduce the life of your home loan and cut down on interest. Additionally, providing a substantial down payment may help you avoid paying private mortgage insurance, which can add a few hundred dollars a month.
Additionally, you’ll also want to keep in mind closing costs, which can be rather significant depending on the size of your loan and your location as you must factor in state and local taxes.
Anticipating the full costs of buying your home—not just your monthly mortgage payments—is essential for first time buyers.
2. Expect the Unexpected: as a renter, your monthly costs tend to stay pretty consistent. However, once you become a homeowner, these can fluctuate and surprise many first time buyers.
Not only do you have to worry about the potential for real estate taxes to go up or reappraisals causing mortgages to increase, but there’s also the issue of repairs, remodeling, and purchasing all your furniture and appliances.
Remember, as a homeowner, when your refrigerator suddenly dies, you can’t simply call your leasing office and have it repaired.
3. Shop Around for The Best Interest Rate: like any important decision in life, don’t just jump into the first offer you get from a bank. Shop around with different banks and mortgage lenders to find the best interest rate for your specific goals and budget.
You may also discover a variety of different mortgages that may be applicable for your situation. There are even mortgages designed specifically for first-time buyers that may require less of a down payment then other mortgage loans.
Additionally, if you aren’t satisfied with your interest rate or loan options, consider taking more time to improve your financial situation.
Pay off other debts like credit cards or student loans or refinance if possible. Not rushing into buying a home when you aren’t financially ready may be the smartest move you can make.
4. Your Mortgage May Be Cheaper than Rent: okay, isn’t it time for a little bit of good news here? While the impending costs of buying a home can certainly be intimidating, many new homeowners are pleasantly surprised to learn that your monthly mortgage payment could even be cheaper than rent.
And on top of that, your monthly mortgage payments turn into money you’re building as equity, not simply throwing away like you do for your monthly rent. This, of course, is arguably the most important benefit of becoming a homeowner in the big picture.
5. Be Open to Compromise: many of us certainly have that vision of their “dream home” in their heads. But in reality, this may not always be exactly what you end up with when you buy your first home. As a first time home buyer, it’s important to keep an open mind and be willing to compromise on certain aspects.
This may include finding compromise on location, amenities, size, yard options, or your monthly mortgage payments or interest rates.
Of course, don’t compromise too much. You shouldn’t be in a rush to home ownership, even though it is appealing. Rather, find the time that is right for you to make this important and life-changing decision.
There are few experiences that are more pivotal in one’s life than buying your first home.
Making the shift from renting to home ownership comes with many exciting challenges along the way, which is why you should team up with an experienced mortgage lender.
These mortgaged professionals can help guide you through the complex process of buying a home and can offer tips along the way to ensure that you’re ending up with the perfect home for you, your family, and your financial goals.