Posted on: 8 November 2017
Purchasing a home for the first time is a major financial commitment. It can also be a stressful process for a first time home buyer to navigate. Finding the right home, getting financing, and making an offer can all be overwhelming. The good news is that there are plenty of things that those who are looking to buy a home for the first time can do in order to make the process easier. Here are three tips for first time home buyers.
Save For A Down Payment
One of the first things that any potential homeowner should do is save for a down payment. While there are financing options available that require small or no down payments, having at least a few thousand in the bank can be a major help when it comes to buying a home. In the past, it has been recommended to put at least 20 percent down on a new home in order to avoid having to pay for private mortgage insurance. For many first time home buyers, a down payment that high is impossible. However, the higher the down payment, the lower the private mortgage insurance will be. Saving before buying can help reduce this extra cost.
Another tip for first time home buyers is to line up their financing ahead of time. Lenders will require financial documentation in order to determine how much the potential home buyer can borrow. Some common documents that may be required include bank statements, tax returns, pay stubs, and more. Going through a lender to get pre-approved for a loan can make purchasing a home for the first time a much easier process. Pre-approval can take anywhere from 3 days to several months depending on the complexity of the home buyer's financial situation.
Budget For Extras
Another thing to consider when it's time to purchase a home is whether or not there will be any additional costs. Closing costs typically range between 2 and 5 percent of the loan amount. The cost of moving into the new home can also be higher than what many first time home buyers expect. These additional costs should be factored in to the total cost of purchasing a first home. An experienced real estate agent can help their clients budget for these costs and walk them through the process so they are not surprised by any extra costs that can pop up during the home buying process.
Purchasing a home for the first time can be overwhelming. First time homeowners should save up for a down payment. The higher the down payment, the lower the private mortgage insurance. Pre-approval for a mortgage can also make the process of buying a home for the first time easier. Finally, it's also important to budget for additional costs. Many first time home buyers are unaware of the additional costs that come with moving into a new home.Share