First-Time Home Buyer Tips in 2021
Nationwide, the collective housing market favors sellers. To counter this, first-time buyers must be savvy in how they approach purchasing their homes. The market competition is high and housing affordability is low. The good news is that there are some simple home buyer tips to help make the process a lot easier.
Work With a Finance Guru
Sometimes, your job, bank or other services you pay for might include a financial advisor or financial planner. This person can help you determine whether your finances are in good shape for buying a home and how to improve it. He or she can also help you determine what your budget is. If you donât have access to these services, consider speaking directly to a loan officer or broker.
Pay Off Monthly Debt
How much house you can afford depends on your debt-to-income ratio. Banks calculate this on a monthly basis, based on other credit commitments. Try to get rid of as many monthly payments as possible and this will have an immediate, positive impact on your DTI. The snowball debt repayment method works well for this.
Save for a Downpayment
Paying off debt is important, but you need cash to make a downpayment. Save at least 3% of your total budget. You also need another 2% to 6% for closing costs, just in case your real estate agent is not successful in getting the seller to pay. As a first-time buyer, you can usually accept gifts from family members, friends and even your job.
Shop Around
Shop around for every professional and service you will need throughout the house-hunting process. No matter how eager you are to get that house, you are still a customer with options. Do your research and choose a real estate agent carefully. Then get multiple quotes for mortgage interest and fees, property inspections and insurance.
Look for Government Programs
Another important thing to shop around for is government programs that offer grants, tax breaks and other perks. All across America, state and local governments have programs in place to support homeownership. Charitable organizations may provide some, as well. These programs are not available to everyone, so be sure to research which ones you might qualify for. Homeownership assistance programs most often support civil servants, minorities and lower-income families.
Consider Rural Areas
Work-from-home opportunities are on the rise. People no longer need to move into big cities in search of higher-paying jobs. Rural homes tend to be less expensive than those in the city, so buyers who prefer a quieter and simpler life might consider checking out these spots. For example, in Southern California, more affordable rural areas include Borrego Springs and Joshua Tree. Note that rural properties qualify for USDA loans.
Get Pre-Approved
No matter where you plan to live, a preapproval can give you a leg up during the negotiation process. It signals to the real estate agent and seller that you are not just window shopping and that the bank has approved your credit-worthiness. This means fewer disappointments for the seller and a higher likelihood of a faster closing.
Hero Home Loans offers pre-approvals for competitive mortgage rates and terms. Request your rate today to get started.
