Purchasing your first home can be an exhilarating experience. From choosing the right neighborhood to figuring out what size home will best suit your needs, there is a lot to consider. And, since this will likely be the biggest purchase of your life, we want to help you get prepared so you can become a happy homeowner in no time. Here are a few useful tips to help you on your way toward homeownership.
Tip #1 Take Advantage of First-Time Homebuyer Programs
As a first-time home buyer, you have a vast selection of financing options available to you. Even if this is not your first home purchase, you may still qualify for some of these money-saving programs. Many first-time homebuyer programs define first time buyers as anyone who has not purchased a home within the last three years. Look into these programs and see what you may be eligible for:
- FHA mortgage loans
- Mortgage interest subsidies
- Down payment assistance
Tip #2 Don't Be Afraid to Negotiate
When you make an initial offer on your first home, you do not have to simply agree to pay the asking price of the house. Even if the house is reasonably priced from the start, there is usually plenty of room for negotiation. Some things you may want to negotiate include:
- Purchase price
- Closing costs
- Potential repairs
Tip #3 Estimate Your Costs and Set Aside Plenty of Funds
An important aspect of getting approved for any loan is proving to your lender that you have the funds needed to pay the down payment and other costs associated with the purchase. It's important to know any potential costs that may be due at closing, so you can set aside adequate funds. Some costs you may need to plan for are:
- Earnest money — Often an amount that ranges from 1% to 3% of the purchase price and acts as a good faith deposit to show your intention to purchase the home. Earnest money is generally something you pay when you put an offer on a home and is applied toward the closing costs once your offer is accepted by the seller.
- Down payment — Typically ranging from 10% to 20% for conventional loans, the down payment is an amount of money you put toward the home in one lump sum. Since you're a first-time home buyer, you may be able to get a loan with as little as 3.5% down if you qualify for an FHA mortgage. However, you should keep in mind that the more money you put down on the home, the less you'll have to pay back over the long term.
- Closing costs — Fees due at closing often include the loan origination fee, inspection costs, taxes, title insurance, appraisal fees, and any other costs associated with your home purchase or mortgage loan. You should receive an estimate from your lender in advance of your closing date, so there won't be any surprises when you show up for your closing appointment.
Purchasing your first home is an exciting experience worth treasuring for life. Just remember to take each step one at a time, so you'll be fully prepared for anything that comes your way. Whether you are buying for the first time or selling your home to purchase the next one, connect with us to learn about how our staging and design services can help you in your real estate process.