First Time Buyers in Today's Property Market

You’re buying a house – how exciting! But suddenly, you’re faced with hundreds of realtors, websites, loans, and home options.

How are you supposed to deal with this information overload?

Don’t worry. We’ve compiled a list of top tips to help you navigate the property market so you don’t make the same mistakes many first-time home buyers make.

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Picture by Avi Waxman on Unsplash

1. Start Saving as Soon as Possible

Once you consider buying a house, you must immediately develop a savings plan and budget. Even if you get a home loan, having extra cash for the down payment and closing costs will be helpful.

It’s a rule of thumb to save 20 percent of the home’s purchase price. Paying a down payment of 20 percent will help you avoid private mortgage insurance (PMI). A larger down payment can also result in lower monthly mortgage payments. That means you can save on interest.

Also, keep in mind that there will be moving costs, so set aside money for furniture removals, home renovations, or any upgrades you might need.

2. Determine What You Can Afford

Most of us dream of living in amazing houses with marble kitchen countertops and rose gold fixtures. But unless you were born lucky, you will have to work hard to pay cash for a home like this.

Fortunately, plenty of mortgage options are available for first-time buyers. These options include:

  • Fixed-rate mortgage: With this type of mortgage, the interest rate remains the same for the duration of the loan term. That means your monthly payments will never increase or decrease. This arrangement is excellent for first-time home buyers as it makes expenses predictable, helping them allocate a budget in advance.
  • FHA loan: FHA loans are insured by the Federal Housing Administration (FHA), making them more secure. You can apply for an FHA loan with a lower credit score than other mortgage loans.
  • Conventional mortgage: This is the most common mortgage type. It’s not a government-backed loan, but it offers plenty of flexibility.
  • Energy-efficient mortgage: This loan is perfect for eco-friendly home buyers. Lenders often offer this loan to borrowers who want to purchase an energy-efficient home. Typically, these homes must be Energy Star-certified.

3. Consider an Assistance Program

Did you know there are assistance programs specifically targeting first-time home buyers?

These programs provide grants to help with down payments and closing costs. Lenders may also offer a low-interest loan to help first-time buyers get started. You should research and inquire about available assistance programs in your local area.

4. Shop Around

Just as you’d look at different homes before you make a choice, you also need to look at other lenders.

Contact different mortgage lenders and get up to five quotes. This step can save you thousands in interest payments over the loan term. The Consumer Financial Protection Bureau recommends that borrowers ask multiple lenders for their estimates for the same type of loan. This way, you can compare costs and calculate estimated monthly repayments.

5. Choose the Right Real Estate Agent

You should find a reputable real estate agent who puts your interests (and not their commission) first. If you know anyone who recently bought a home, ask them for their agent’s details (if they had a good experience).

You can also read online reviews of different agencies to find one that sounds good.

When contacting an agent, ask them whether they have experience with first-time buyers and how they plan on assisting you. Their answers can tell you what working with them will be like.

6. Know What Kind of House You Want

You can’t just open Zillow and start looking. The thousands of options might overwhelm you. Before you begin the house hunt, have a clear idea of what you want, including the number of bedrooms and bathrooms.

Do you want a freestanding house, a condo, an apartment, or a tiny home? Do you want a lock-up and go, or are you willing to do some DIY and fix up a family home yourself? Will this be just a starter home, or do you want to buy your forever home?

You should have answers to these questions before you start looking. This will help you narrow down your options.

7. Location, Location, Location

This tip is related to the one above. As much as you need to know what kind of house you want, you also need to know where you want to buy.

And we don’t just mean which city.

Do you need to be near work, a school, a hospital, or an airport? Which amenities are important to you? Do you prefer to live in the city or on the outskirts?

Before deciding, you should drive by the neighborhood you’re eyeing (best to do this during rush hour) to get a feel for the place and how long your commute and errands might take.

8. Don’t Be Afraid To Check Viewings

Is there an open house for a property you’re interested in? Go!

Most real estate agents now offer 3D virtual home tours, and although it’s nice to judge a house from the comfort of your bed, nothing will be as effective as seeing it in person.

Not only will you be able to get a natural feel of the place, but you’ll also get to assess the neighborhood. You can also talk to the estate agent in person and ask questions about the age of the house and the plumbing and electrical systems.

Wrapping Up

Becoming a first-time homeowner is an exciting time in anyone’s life. But it can also be daunting, given it’s a massive investment.

However, with these top tips and a bit of common sense, you’ll be able to make all the right choices to do it right the first time.

Just remember not to rush any decisions. Money is at stake, and you want to make sure you make sound financial decisions that will allow you to own and live in your dream home.

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