6 Tips to Buying a House for the First Time

Guest Post by Bogdan Butoi

Buying a new home can be a challenging event for some people, yet an exciting one. Choosing the right home appears to come up with lots of consequences if you’re not well-prepared. We’ve gathered in this article some of the most important tips to consider when buying your new home. 

First, ask yourself if you’re ready to buy a new home.

Where should you start?  . . . As a first-time home buyer, the entire process might seem like a daunting task. but it shouldn’t be,

If you give yourself enough time to prepare and make the process run smoothly.

Building the home of your dreams can become real, but the key is to make a plan first. 

Organize the purchasing process to make sure that your journey is satisfying.

The goal is to understand the new home buying process, so you know what to expect.

You have plenty of questions, for sure, but first, consider which type of home, neighborhood, and mortgage are right for you.

Then, you can think about how to personalize your home.

Let’s see some examples of new homes offers:

  • Large bedrooms with big closets, and luxurious baths
  • Energy efficiency (significant cost savings).
  • Open floor living rooms (open to the kitchen).
  • Brand new furniture and products, under warranty.
  • Stylish cabinets, countertops, carpets, tiles, flooring, appliances, and more. 

Given the many advantages of new homes, most home shoppers are already putting them on their lists. Let’s see some other significant factors that will help make the purchase faster. 

Check your credit score

One of the most important factors to consider when buying a new home is that you need a good credit score.

If your credit score is good, you’ll get approved easily and in favorable terms, but if your credit score is low, the chances are that you won’t get approval.

If, however, you’re going to get approved, you’ll have high interest rates. Credit score examples:

      • Reasonable: 580-690
      • Good: 740-790
      • Excellent:800+ 

Check your credit score and determine if it needs improvement.

Lenders will analyze your credit score and look for the highest credit rating possible.

Your credit score can impact your mortgage, loans, and credit cards.

You should pay attention to your payment history and current debts; it may influence the type of credit or loan you want to obtain. 

Choosing your first mortgage

Before starting the home research, wait for the pre-approved letter for a mortgage.

Choosing the right mortgage is a significant decision that can make a big difference, financially speaking.

There are so many options available, no wonder it can be hard to choose which mortgage suits your needs best.

First time buyers should come up with a list before starting the buying process:

      • How big is your deposit?
      • Mortgage overpayments
      • How much money can you borrow? 
      • Repayment? Or interest only?
      • Consider the mortgage fees
      • Mortgage penalties
      • Are you qualified for a government scheme?

First thing you’ll need to do is to talk to a mortgage agent.

After deciding which mortgage suits your needs, you can go directly to a lender, or get the mortgage through an agent.

How much deposit do you need for a home loan? . . . Most banks or lenders will require a deposit of 20%.

If you’re determined to raise the money, there’s a high chance that the properties prices to increase, especially in big cities. 

Speak with your lender and see which opportunities you have to reach your property goals and get approval for a home mortgage.

In the meantime, to see if you’re able to afford the monthly payments, you can use the mortgage repayment calculator.

You just have to enter your incomes and expenses into the budget planner calculator, and wait for the answer.

You’ll receive a picture in an easy-to-understand format that will help you determine what type of home loan may suit your financial incomes. 

Determine your budget

There are other costs included along with the loan payment, including:

  • Mortgage insurance
  • Property taxes
  • HOA fees (Homeowners Association Fees)
  • Homeowners insurance

You must ensure that you have enough money to cover all that cost.

The property taxes, homeowner’s insurance, and mortgage insurance are added to your monthly payment.

Your debt-to-income ratio (DTI ratio) will determine the maximum amount of money you’re qualified for. DTI to your monthly income related to your monthly duties (auto loans, credit cards, etc.).

The maximum of DTI ratio lenders will allow you is 41%. 

Make a list with home features you want in your new home

It’s a good idea to consider the key features of your new home.

Ask for opinions to your family and friends who already been into the process of buying and organizing a home.

What important features they wish they had? Or didn’t have?

How many bedrooms, bathrooms are needed in a home?

You’re likely to receive some great answers and ideas.

You can’t really find a house with everything you need in it. . . .So, prioritize making a list with home features you want in your new house and be ready to compromise. 

Hire a real estate agent

First-home buyers make the terrible mistake of not calling a real estate agent.

They will help you find the home of your dreams.

However, you want to avoid paying for fees, as realtors can get good commission when you buy a house.

You might say “It’s all about the money…”. But it’s not always about money,

if we consider how beneficial it is to sit relaxed on the couch and let others do the work for you. So, why not use an estate agent? 

Compare loans from multiple lenders

Compare loan offers from many lenders – when shopping for a new home, it’s not recommended to stop along the first lender that will approve your loan.

You should compare your loan offers from many lenders, and choose the one that suits your needs.

Rates and fees can vary from one lender to another, so make sure you negotiate lower fees with lenders.