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Last updated on February 3rd, 2021 at 10:45 am
Author at Compare Closing LLC
Amanda Byford has bought and sold many houses in the past fifteen years and is actively managing an income property portfolio consisting of multi-family properties. During the buying and selling of these properties, she has gone through several different mortgage loan transactions. This experience and knowledge have helped her develop an avenue to guide consumers to their best available option by comparing lenders through the Compare Closing business.
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Being a first-time homebuyer is exciting and overwhelming, especially when you see homes priced at a median of $250,000 and the available homes selling off the market in just three weeks.
With real estate trends like these, you might hurt your financial goals and keep you paying a mortgage right up to your retirement!
So let us guide you through buying a home that you love and that doesn’t hurt your future money goals.
- Pay off all debt and build an emergency fund of 3-6 months’ expenses because when you own a home, you’re responsible for all the maintenance and upkeep costs. And those can add up fast.
- Determine how much house you can afford – by making sure your monthly housing costs (including HOA fees, taxes, insurance, etc.) Is not going to be more than 25%of your monthly take-home pay. Remember property taxes and homeowner’s insurance will affect your monthly payment. You will need to consider then too before settling on a maximum home price.
- Save for a down payment – Of 20% or more so you don’t have to pay for PMI, which usually costs 1% of the total loan value, and it’s added to your monthly payment. There are definitely first-time homebuyer programs like arms, FHA loans, VA loans, that offer single-digit down payments they may sound tempting. But don’t use them! These options will cost you more in the long run.
- Save for closing costs – On average, closing costs are about 3–4% of the purchase price of your home.
- Appraisal
- Home inspection
- Credit report
- Attorney
- Homeowner’s insurance is some of the fees during your home-buying process.
- Get preapproved for a loan – Get pre-qualified for a loan and take the extra time to get a preapproval letter before you start your home search. Preapproval shows sellers that you’re a serious buyer, which is a great way for first-time homebuyers to get ahead in a competitive market.
- Find a home for sale in your price range – Find homes you like online and send them to your agent, who will have a good idea of what you’re looking for. Then they can use a multiple listing service (MLS) to find homes that meet your criteria in your desired areas.
- Research neighborhoods for best fit – Do not make a decision based on the property alone, check out for crime rates, the quality of schools in your prospective neighborhoods. Calculate your new commute times to see if are manageable. Visit the neighborhood at different times and days to check for traffic conditions and noise levels and to see if people are comfortable being outdoors. Only choose a neighborhood that you and your family feel good about.
- Make a competitive offer (That’s Within Your Budget!) – Ask your agent to help you make sure your offer is competitive but also within your budget and the home’s value. Be careful not to make an impulsive offer that’s higher than you can afford just to knock out the competition. A personalized letter might help your offer stand out among multiple bids in a hot market.
- Prepare for closing – The average closing process takes 43 days, which gives you plenty of time to tackle closing items. Make sure you read every document and ask your real estate agent to explain anything you don’t understand, especially before you sign the official contract for the home transaction.
Reference Source: Ramsey
