Deciding to buy your first home can be extremely nerve-wracking. Buying a home is always stressful, and if it’s your first time making such a large decision, it will likely feel even more intimidating. To help make the process a little easier, you need to follow the right advice.
Here are five tips for buying your first home.
1. Get pre-approved
Getting pre-approved is an extremely useful tool in the budgeting process. While you can use a mortgage calculator to get a quick sense of monthly payments, pre-approval delivers a more detailed and customized look at your loan options.
It’s also the best way to show real estate agents and sellers that you’re serious about buying a home. However, the amount you are pre-approved for doesn’t mean you should plan to borrow the max amount of your pre-approval. Pre-approval gives you an idea of what is possible, not what’s necessarily affordable or even advisable, based on your financial priorities.
2. Real estate agent
Find yourself a good real estate agent – one that will scour the market for homes that meet your needs and guide you through the negotiation and closing process. Get agent referrals from other recent home buyers. Interview a few agents and request references.
When speaking with potential agents, ask about their experience helping first-time homebuyers in your market and how they plan to help you find a home. Since the housing market is so hot right now, there is a lack of inventory. For example, Arlington real estate has a huge demand for single-family homes, and the prices are soaring. There are endless reasons why you’d want to work with a real estate agent, but some are especially critical in today’s market.
3. Hire an inspector
Hiring a home inspector is not “mandatory” when you buy a home. However, a home inspection can be one of the best pre-home buying strategies a home buyer can use. Hiring a good home inspector can save first-time homebuyers hundreds or thousands of dollars simply by uncovering a home’s hidden or deferred maintenance problems or severe substandard structural issues.
4. Stick to your budget
Don’t get caught up in a bidding war. Competing with other buyers is no fun, and to win a bidding war, you often have to increase your offer. This isn’t all bad, as long as you’re able to stay within budget. If you get caught in a bidding war, you could end up spending more than you want.
Decide how much you’re willing to pay for a house in advance, and resist the urge to exceed that limit. In other words, be willing to walk away. You will find a perfect house in your price range.
5. Don’t apply for new credit
Your credit score is the most important factor there is when it comes to getting a mortgage. Do not do anything to drop your credit score or raise red flags to the lender. Avoid applying for any new lines of credit or loans while you are shopping for a new home. When you apply for new credit and open new accounts, your credit score will initially drop and build back up over a few months.
Don’t accumulate debt on your credit cards either, as that will drop your credit score as well. Actually, you should be working on paying the balances down as much as possible to help increase your score.