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8 Tips For First-Time Homebuyers
Buying a home can be an exciting, daunting, and rewarding endeavor, but first-time homebuyers may feel intimidated. Taking the time to solicit advice from real estate professionals and planning ahead will make the process less daunting.
Here are eight tips for first-time homebuyers:
1. Reduce Debt and Create an Emergency Fund
As a first-time homeowner, unexpected expenses will surely arise during the purchasing process and when you move into your new home. It is vital that first-time buyers reduce their debt and save up as much as they can for a down-payment, closing costs, and the expenses of homeownership.
2. Don’t Borrow More Than You Can Afford
Your mortgage will likely be one of the largest expenses of your lifetime, so as a general guideline your 30-year fixed rate mortgage payment should not exceed 35% of your monthly income. Work closely with your lender to understand what payment amount fits within your budget. Additionally be wary of adjustable-rate mortgages (ARMs) which offer low initial rates but eventually increase – these could cost hundreds or even thousands more in additional interest over time. However, ARMs can be a good fit for certain situations, so examine all your options carefully.
3. Get Preapproved for a Mortgage
It’s best to get preapproved for financing before shopping, which involves consulting with an experienced mortgage loan officer. Once you’re pre-approved, finding a REALTOR® that you trust is your next step. He or she should help find you an ideal home that meets your budget requirements while working closely with lenders who understand the local market and can find you the most cost-effective mortgage solutions.
4. Avoid Overextending Your Budget
Before making an offer on a home, obtain estimates for any repairs or upgrades it might need, including estimates from professional home inspectors if appropriate. In addition, conduct an inspection yourself prior to closing so as to be aware of any potential hidden issues which could cost money in the long run.
5. Be Prepared for a Competitive Market
It isn’t unusual to experience multiple offers when houses hit the market, particularly in hot markets. Be ready for competition among buyers and don’t hesitate to make bold offers if the home resonates with you – remember, there’s always the option of backing out later if it doesn’t pan out!
6. Don’t Forget Taxes & Insurance
Your monthly payments should include taxes, hazard insurance, and potentially flood insurance that must be paid when closing on a home, so check with your real estate agent or lender regarding tax rates in your area. Most mortgages include the tax and insurance payments in the monthly payment, so be sure to account for those when creating your budget. Mobile mortgage calculators can be helpful to get a good estimate of your payment.
7. Keep a Record of Everything
It is also essential not to lose track of all the paperwork associated with buying a home. Use cloud storage or file cabinets if possible; either way, always have copies of closing statements, mortgage statements and deeds in your possession for safe keeping.
Once you’re ready, complete an application with a lender to get the process started. Buying a home can seem like an insurmountable task, but an experienced lender and REALTOR® team can make it possible for your and your family!
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