Buying a home for the first time is a lot like falling in love. It’s exciting, romantic and a little overwhelming. Here are some tips to help you avoid a broken heart and a busted budget. Let me know if you have anything to add to our Top 10 Tips for First-Time Homebuyers.
1. Know What You Can Afford
It’s fun to dream big, just don’t go head over heels for something that’s out of your league. Pre-qualify before you start looking. That way you’ll have a realistic idea of what you can borrow and a better grip on your bargaining power. Try this mortgage calculator free.
2. Check Your Credit
Blemishes on your credit can drag down your score and make it more difficult to qualify for today’s low mortgage interest rates. You’re entitled to a free credit report once a year from the three credit bureaus at www.annualcreditreport.com. I’ll be covering credit dos and don’ts in my next blog. In the meantime, read more about credit and mortgages here.
3. Read Up on Lending Programs
There’s an alphabet soup of loan options, but most are either fixed rate for the life of the loan or adjustable (moving up or down based on national rates). Other variables include length of the loan. The down payment (cash up front) your need will vary by loan program. Know what you’re getting into before you sign on the dotted line.
4. Make a List
Can’t live without a big backyard or a three-car garage? Mad about a media room? Decide ahead of time what you have to have and what you can be flexible about. Making must-have and a like-to-have lists will make it easier for you to evaluate the homes you look at.
5. Study Up
It’s never been easier to find critical information before you buy. You can research neighborhood and community resale values, crime rates, livability ratings, schools and proximity to the things that matter to you. Remember, the cheapest home in a great location will ultimately be of better value than an expensive home in an undesirable area.
6. Keep Score
Use your lists and research to keep score of the homes you tour. Assign numerical values to must-have and like-to-have features. Make notes of the various pros and cons of each home.
7. Weigh Price/Payments Against Interest Rates
Over time, a lower interest rate can end up saving you thousands of dollars – perhaps even enough to offset the initial higher price and monthly payments.
8. Consider the Hidden Costs
Be sure to factor in extra costs such as private mortgage insurance, HOA and other community fees, closing costs, points and property taxes.
9. New or Used?
If you’re buying an older home, you’ll also want to give a great deal of thought to cost of repairs. Replacing the roof, electrical rewiring and new plumbing can quickly turn a bargain into a money pit. With a new home, you’ll have the advantage of a builder’s warranty as well as manufacturers’ warranties on products in your home.
10. Do You Love It?
After all the practical factors and logical aspects have been considered, give some weight to your emotions. Will you wake up glad to live here? Will you look forward to coming home every day? If the answer is yes, then tie the knot. You’re in love!