A big part of the American Dream is to be able to be a homeowner. Why is homeownership so intrinsic to humanity? First of all, a home will be the most expensive purchase that a person will ever make in their life. Home is where you will raise your family, and it will be where you will find lodging. There is nothing more important than to have a place to lay your head at night, and when the place is completely yours, it gives a sense of security. Added to that, you want to like the space that you live in, so you should carefully choose a home that will be appropriate for you and your family. If you are a first-time homebuyer, there are some important tips that you need to know. Find out seven important tips for you to know as a first-time homebuyer.
1. Do Your Research
Some people are so excited about the prospect of buying a home that they jump in full force without really doing enough research. You really have to know what kind of neighborhood you want to live in, what is the school district of the neighborhood that you live in? Are there any extra HOA fees? You will want to know that as well. Poor planning and improper calculation can cause big problems in buying a home.
2. Use a Real Estate Agent
You may wonder what does a real estate agent do for a buyer? The truth is, a real estate agent takes a lot of stress off of your shoulders. This is the person who looks for homes according to your guidelines, does the calculation, and does a lot of the background work that can be overwhelming for you. A real estate agent is a must if you are buying a home for the first time.
3. Don’t Buy More Than You Can Afford
You do well to understand that your housing expenses should only account for 30% of your monthly income. If you buy a house that is extremely expensive and you do not have enough income, then you can be house poor. Being house poor can be terrifying because just one misstep can make you get behind on payments. Only buy a house that you can afford.
4. Know What Things Are Important To You
Before you decide to buy a home, you need to write down the assets of a home that are important to you and your family. Each family is different as to what characteristics they want in their home or what they want out of the neighborhood. No matter what the case may be, you will be looking at homes that you don’t like unless you know what things are necessary.
5. Understand Hidden Fees
When you are buying a home, everyone talks about the mortgage, but you have to understand that there is also insurance, possible private mortgage insurance, and there are also taxes that need to be paid. Apart from that, you do well to get a good idea of what the average utilities are going to be per month so that you can add that to your monthly expenses.
6. Put Enough Money Down
Don’t be so consumed with the idea of buying a home that you do not recognize the importance of saving. It is best to have between 20% and 30% down for your home. If you do not save enough money, then you will have to pay Private Mortgage Insurance. This is an extra fee tacked onto your mortgage insurance and taxes. In order to avoid that cost, save enough money for your down payment. Even if it means putting off buying your home for a few years, it is worth it.
7. Build Up Your Credit
It is vital for you to have good credit if you want to be able to get a good interest rate on your mortgage. If your credit is not good, it affects your mortgage rate. Work on your credit before you apply for your mortgage.
Like most families, no doubt you want to own your own home. There is no reason why this dream cannot come true for you. You just have to do things right. By planning and saving, you can make your dream of homeownership a reality.