Valuable Advice For Buyers Purchasing Their First Home
General Real Estate
Updated on Feb 19, 2020
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Are you going to be buying a home in the near future? If so, it is always great to brush up on some of the more essential topics that could possibly come up in the process. Buying a home for the first time is surely exciting times but also can quickly unravel into a nightmare if you're not careful.
Let's take a look at some of the vital things a first-time home buyer can do to put themselves into a better position of becoming a homeowner. By educating yourself, you'll be less apt to make a foolish mistake that will cost time and money.
Understand and Build Your Credit Before Buying
There are not many more essential things to do when purchasing a home than building your credit. Getting your financial house in order should start well in advance of purchasing a house. In fact, you should be building your credit throughout your college years. Paying particular attention to paying back debts when they are due is vital. Many buyers do not realize just how critical their credit score is to get the best mortgage terms.
Considering the interest rate you receive on a mortgage will impact you for many years, it makes sense to do whatever possible to make yours better. Monitoring your credit scores is also essential to do. You can do this by getting your free credit report, which the three major credit agencies must-do for you once a year. The article at Maximum Real Estate Exposure does a fantastic job of explaining the process for receiving your credit report.
Do you have some blemishes on your credit report? There are also companies that can help you work on establishing a better credit history, including Credit Karma, as well as Credit Sesame. Take a look at a comparison between Credit Sesame and Credit Karma to determine which company sounds better for your financial needs.
Once you feel like you're in the best financial position goes as far as credit, work on establishing a sizable downpayment. You will also find that having a larger downpayment of twenty percent will get you more favorable financing terms, including not having to pay private mortgage insurance.
When you have that money saved getting a preapproval will be your next step in the home buying journey. Make sure you interview at least a few lenders. Terms and conditions can vary from one lender to the next. It is advisable to be fluent in all of the first-time buyer financing programs. There are many of them, so picking the right one for you will be a valuable exercise.
Looking at Homes
The next step in your home buying journey will be looking at homes. It is highly advisable to find a local buyer's agent you will be comfortable with using. Don't make the mistake of going directly to the seller's agent. Lots of first-time buyers make this blunder. Doing so could cost you thousands of dollars. An excellent buyer's agent will not be concerned about how long it takes for you to purchase a house. The best agents will put your interests ahead of their own.
They will be with you every step of the way, helping you make informed decisions. When you find a home that suits your needs, they will guide you on an appropriate offer. One of the most critical roles of a buyer's agent is to make sure you pay no more than fair market value.
If you land the home, you want, the next step will be coming up with an appropriate earnest money deposit. The amount will often be dictated by local custom. You will need to come up with the house deposit soon after making an offer, if not at that time. These funds will be held in the listing broker's escrow account until the time of closing. It is vital that you understand how earnest money works. Thousands of dollars of your money will be at risk if you do not perform according to the contract. You could lose your earnest money if you're not careful.
Conducting a Home Inspection
Once you have nailed down the contract of your home purchase, it will be time to move onto the due diligence phase. You will be allowed to do more research on the home, including doing a thorough home inspection. Hiring a professional to look over your potential purchase is an absolute must.
Doing a home inspection will be an investment that will be well worth the cost. The cost of a home inspection is peanuts when compared to what you are paying for the property. Never try to save money by going to a cheaper home inspector. Saving a few hundred dollars is not worth someone missing thousands of dollars worth of problems.
If there are problems discovered, you will have the ability to either back out, accept the condition, or re-negotiate with the seller. The latter is what most often happens. Your buyer's agent will again be a valuable sounding board on reasonable requests.
Preparing for Closing
Once the home inspection has been done, the only hurdle that usually remains is procuring financing. You should be in constant communication with your mortgage company, so they generate a commitment letter on time. Make sure you keep up with getting them any paperwork required in a timely fashion. Not doing so could jeopardize your lender's ability to make the mortgage commitment date.
Closing Day and Final Walk-Through
It won't be long now before you can officially call yourself a homeowner. Before doing so, you will want to conduct a final walk-through to make sure the seller has left the home in the same condition as when you made your initial offer. Look for any furniture dings and other defects. Obviously, make sure to check the vital systems such as the plumbing, heating, cooling, and electrical systems.
Do all these things and the outcome will probably be a pleasant one.