So you’re thinking about putting a down payment on your first property?
It’s likely to be the biggest, and most stressful, purchase of your entire life.
But knowing how to navigate the house buying process can help you save money and close the deal.
If you are about to take the plunge and get your foot on the property ladder, you won’t want to miss our 20 top tips for first time home buyers.
20 top tips for first time home buyers
1. Pay off debt
The expense of owning a home doesn’t stop with the down payment and mortgage.
As a homeowner you’re responsible for all of the maintenance and repairs. Being debt-free will allow you to invest your money in the upkeep of your new home.
Plan an emergency fund pot to cover unexpected costs as well.
2. Start saving early for your down payment
The bigger your down payment, the more choice of mortgage options you will have available to you.
This is because the bigger the pot of money you’re putting down, the less risk you present to lenders.
Therefore your deals will be more competitive and potentially save you money on rates.
3. Work out how much you can afford
If you don’t know roughly how much your mortgage repayments will be, how do you know if you can actually afford to make them?
Use an affordability calculator to work out how much you can afford to borrow first.
The tool will look closely at your income and outgoings and advise how much your repayments will be.
4. Check your credit score
Why is your credit score important for buying your first home? The better your credit score and history, the more likely you are to be offered decent interest rates on your mortgage loan.
Experian provides a free credit report and FICO® score and will advise on how to boost your score.
5. Look into first time buyer assistance programs
It may be possible to get financial help from your state in the form of a grant or no-interest loan as a first time buyer.
Contact your local government agency to find out more information and to get a list of eligibility criteria and approved mortgage lenders.
6. Discover your mortgage options
Depending on the size of your down payment and eligibility, the typical mortgage options Americans have are:
- Conventional mortgages – a loan not insured by the government.
- Government-insured mortgages – government buyer assistance programs.
- Adjustable-rate mortgages – a loan with fluctuating interest rates.
- Fixed-rate mortgages – the same interest rate throughout the lifetime of your loan.
Understanding the options described above will help you work out which loan is best for you.
7. Compare mortgage deals and fees
Picking the right type of deal for your personal circumstances is really important for first time buyers.
Chances are you will be signing up to a three plus year deal, so you want to get it right.
Consider the interest rates, arrangement fees, valuation fees and legal fees from all lenders before making a decision.
8. Get a mortgage preapproval letter
A mortgage preapproval letter will determine how much a lender is willing to give you under certain terms.
This letter proves to estate agents and home sellers that you’re a serious buyer who is in a position to get a mortgage approved.
A home seller is more likely to accept an offer from someone who has already taken this step.
9. Check out the state and neighborhood you want to live in
Buying your first house is a huge commitment, so it’s important to get it right.
Visit the neighborhood that you’re considering buying in during different times of the day to get a feel for the area.
Check out the local amenities and make sure it ticks all of your essential boxes.
10. List your needs and nice-to-haves
Ok, so we would all love a pool in our backyard, but unless it’s within your budget, it’s not essential.
Your needs for a house should be non-negotiable.
Nice-to-haves should be achievable but it wouldn’t be a deal breaker if the house or area doesn’t have it.
11. Choose a reputable real estate agent
The best way to find a good real estate agent is by asking family and friends for recommendations.
Speak to a list of potential agents and ask them about their experience of helping first-time buyers purchase their first home.
12. Stick to your budget
It’s vital that you don’t go over your carefully considered budget when buying a house.
Only view and consider properties that are under your price limit so that you have some room to increase your initial offer slightly if there is another offer on the table.
13. Use virtual viewings to your advantage
Quickly narrow down your list of potential properties by making use of online 3D virtual home tours.
Virtual viewings help you to avoid wasting time and allow you to move quickly in a fast paced market.
Don’t just rely on virtual viewings though. You’ll still need to visit a property before making an offer.
14. Make a competitive offer
Now comes the exciting, and nerve-wracking, part.
You’ve found the house you want and are ready to make an offer.
Make a written offer on the property that you’re comfortable with.
The seller may come back and negotiate. Remember to walk away if the terms are not right for you.
15. Hire an inspector
A house inspector will write a written report about the overall condition of the property, including its foundation, structure, plumbing and electrical systems.
This is your last chance to uncover any problems with the property before parting with your money.
16. Prepare for closing
Congratulations, your offer has been accepted.
This part of the process can take up to 40 days so you’ll need to be patient.
Use the time to read through all of the documents provided by your real estate agent and ask them to clarify anything that you’re unsure about.
17. Save physical copies of paperwork
An electronic database will hold copies of your housing deeds, however it’s a good idea to keep hard copies somewhere safe just in case you ever need them as proof of your claim to the property.
18. Get covered
Could you afford to pay for significant damage if a fire or flood happened in your home?
Protect yourself from the possibility of huge financial loss in the event of your property and contents becoming damaged or destroyed.
Some mortgage lenders require home insurance as a condition of your mortgage.
19. Keep saving
The cost of your first property doesn’t stop when you get those keys.
Aim to have an emergency savings pot that holds at least six months’ worth of expenses to cover any unexpected costs that may crop up such as repairs and maintenance.
20. Give your house regular TLC
Investing in the upkeep of your new home will save you money in the long term and increase the value of your house, which is important if you decide to sell up in the future.
Looking after your property will also protect it from long-term damage that will cost significantly more to put right.
Buying your first property
Owning a house is a huge part of the American dream. Make it as stress-free as possible with our effective, actionable tips.Did you find the tips useful? Check out our blog for more home ownership advice.