Sound Advice For First Time Home Buyers
With mortgage rates at all-time lows, and a huge increase in foreclosures, it is no surprise that many apartment-dwellers are ready to become homeowners. Buying your first home is very exciting, but also very scary and ripe for disaster. Before making the biggest investment of your life, use the tips below to make the process easy and error-free.
Buying vs. Renting: Before buying a house, it is essential to look at the pros and cons of buying vs. Renting. A house is a long-term investment. You will own the land as well as the building. Your payments will no longer disappear but are instead equity that can be pulled back out if financially necessary. The large amount of mortgage interest may seem like a bummer at first, but consider that mortgage interest is tax deductible. That could mean you go from paying the government, to getting a refund. Of course, this all sounds great, but it does not mean you can afford house payments. There are a number of mortgage calculators online that can help you figure out what you can afford. Remember to add on maintenance costs to any potential house payment. Apartment maintenance is usually free, home maintenance is not. Finally, do not forget the down payment! In the days before the mortgage crisis, 100% financing was easy to get. Those days are over, and you will have to put at least 3. 5% down. If you do not have that kind of cash, keep renting and build up your savings.
Educate yourself: The smartest first-time homebuyer is the one who does his or her own research before finding a real estate agent. Use the mortgage calculators to get an idea of your price range. Then scour the open house ads in the newspaper each week, and visit as many as you can. Advertised open houses do not require you to have an agent. The more homes you visit, the easier it will be to know what you want when the time comes to buy. Online research can be helpful, too. Zillow, Redfin, and Yahoo are just a few websites with easy-to-use home search features. If possible, read some books on the home-buying process to familiarize yourself with real estate lingo. Never underestimate the power of word-of-mouth, either. Talk to friends, family, and co-workers who have recently bought homes. Try to know as much as possible about the process of buying a home in order to limit potential surprises.
Check Your Credit: There is nothing worse than going to a lender for pre-approval, and finding out you have bad credit. Get your annual free credit report and work to clear up any red flags. A credit score under 700 will not cut it these days, and it only costs a few dollars to get your score from one or more agencies. Your lender will be checking out your finances as well. Remember that a good debt-to-equity ratio is vital (under 40% is ideal). If your financial state is not quite good enough, consider having a co-borrower. A close family member with excellent credit and finances can help you get an otherwise unattainable loan.
Avoid Bullies: Both lenders and real estate agents can be bullies. Only you can make the final decision, and this is too big of a decision to let someone else make for you. A good lender will listen to your financial concerns and be honest with you about any potential issues. Be wary of any lender who is quick to push you into one type of loan, or a lender that wants to lock you in for a loan when you only came to get pre-approved. Try to find a lender who is very familiar with FHA and other first-time homebuyer programs. You do not have to get your loan from the same lender who pre-approved you! When the time comes to get your loan, shop around for the best rates and incentives. Shopping around is also beneficial when it comes to choosing your real estate agent. Never forget that an agent’s income is almost entirely based on sales. For that reason, many agents will try to “upsell” you into a house you cannot afford. When choosing an agent, make sure to ask for references, and always keep in mind that you are the one buying the house!
Never Settle for the First House: It is easy for a first-time buyer to fall in love with the first house they see. Do not make any final decisions unless you have seen some comparable houses. If you really feel like you have found the perfect house, visit more than once. Drive by the house at different hours of the day in order to get a feel for the neighborhood. Take pictures so you can refer to them when you are making your final decision. Some houses do sell quickly, and a competitive environment might make it necessary to put in an offer. When this is the case, be sure to find out what your options are if you decide to pull out. Initial offers are never final.
It is still a buyers market. There is an increasing amount of affordable homes out there just waiting for first-time buyers. Do your homework and make your decision with confidence. Following the tips above is a great start. The right home can be the investment of a lifetime.
Author Lucinda Pryse enjoys writing about various topics, including sports, health, and education. Visit her latest web site where she discusses fabric roller shades and roll up window shades.
Author: Lucinda Pryse
Article Source: EzineArticles.com
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