Are you looking for some tips for first-time home buyers? If so, I’m happy to share them with you. This article is one in a series of articles about buying real estate with a low down payment. In this one, we’ll discuss how to choose the right neighborhood, the costs involved with the purchase, and the costs involved in the closing process. We will also cover why it is often better to purchase real estate in a prime neighborhood rather than an outlying neighborhood.
Think about the price range
When considering the neighborhood to purchase your first real estate in, you should think about what price range you can afford to pay for a home. Most people, when looking for a house, make the mistake of looking at the asking price without realizing that they need to budget for the repairs, upgrades, and maintenance that may need to be done after the purchase. The best way to get a handle on what you can realistically afford is to talk with your real estate agent, but if budgeting isn’t something you’re comfortable doing, then a good rule of thumb is to find the mid-range price range that you can comfortably afford.
Find the best loan type
After you’ve decided on a price range, the next thing to do is find the best loan type that fits your financial situation. When shopping for loans, be sure to get at least three different quotes from different lenders so that you can compare them. It’s important to shop around, even when choosing your real estate agent, because you never know which lender will approve you. Some sellers have sellers insurance while others don’t, and it’s important that you understand all of your options so that you don’t end up buying more insurance than you need.
In terms of home loans and mortgage options, there are several ways for first-time buyers to go. Most buyers these days are opting for the conventional loans most banks offer, but there are some lenders who specialize in providing first-time buyers with VA loans and FHA loans. If you decide to go with conventional loans, make sure you keep in mind the interest rates that will be charged. It’s best to shop around for interest rates prior to actually going to the lender, so you’ll know whether or not it’s the best option for your financial situation. There are a number of free online calculators available for first-time buyers to use.
Your credit score is something that you absolutely must consider when shopping for a mortgage. Your credit score will dictate the amount you can borrow, the terms of your loan, and the rate you pay. While it used to be true that first-time home buyers could obtain loans with little or no credit, those days are rapidly coming to an end. As a first-time home buyer, you may need to consider a mortgage that has an adjusted interest rate (AAER) higher than your current credit score. If this is the case, you’ll be paying more money every month to finance your new purchase, which could quickly become a large debt.
Move on to shopping
Once you’ve found a lender who will approve you, then you can move on to shopping for the best possible deal on your property. One thing you may want to consider is an unsecured loan, especially if your price range includes some more expensive repairs. While this type of loan will give you flexibility in the way you repay your loan, lenders are beginning to see it as a risky investment. If you plan on purchasing a home within the next five years, you may want to seriously consider an unsecured loan.
Choose your real estate agent
When it comes to choosing your real estate agents, make sure that you do some homework and find someone that you are comfortable with. This is your first chance to establish a rapport with the agent, so it’s important to be comfortable and confident in their abilities. Asking friends, family, and co-workers for referrals can also help. Real estate agents who have experience in your price range are often preferred over new agents by buyers and sellers alike, and having a trusted real estate agent will save you time, money, and headaches down the road.
Final tip
When shopping for mortgages, remember that the more information you have the better off you will be. Educate yourself on adjustable-rate mortgages, the advantages and disadvantages of FHA loans, the minimum standard of acceptable credit score for first-time home buyers, and the maximum amount that a bank or lender will allow you to borrow. As you gain more knowledge about how the mortgage market works, you’ll be able to save money on interest costs and increase your chances of finding a low-cost loan that fits your particular needs. Purchasing your first home is an exciting time in your life, but it’s important to remember that you’ll also need to make some smart mortgage choices. Start saving today to find the best mortgage for you!