Purchasing a new home, whether it is your first or your fifth, is exciting. However, to have a great experience, you need to navigate the process properly. Therefore, these are a few tips for first-time home buyers.
Analyze Your Finances
Before you start searching for properties, e.g., “real estate Toms River,” you should look over your finances. Do you have anything on your credit that could affect your loan approval or interest rate? Even average credit could significantly increase your down payment and interest. Also, pay down your consumer debt and do not open any new credit accounts or make any large payments six to eight months before you purchase your home. Review your savings to ensure you have a proper down payment. Many loans require up to or more than three percent of the total loan value. Also, you may have to pay for closing costs, which could be three to six percent of the sale price. In addition, you should have enough saved that you could pay your mortgage and survive for up to six months in the event that you lose your income.
Being able to afford your loan payments and getting approval for a loan is only part of this step. You also need to ensure that you are willing and able to commit to a mortgage loan. Most loans are either 15 or 30 years, so it’s a long commitment. You should stay in your home for at least five years to avoid losing money.
As a first-time homebuyer, don’t search for properties until you are preapproved for a loan. However, you don’t have to take the first loan you are approved for. Research the loan options from different financial institutions. Some may offer lower down payments, interest or fees. Also, you may qualify for special loans, such as VA, first-time homebuyer or USDA loans that may offer financial incentives. Look into assistance programs.
After you have your finances and credit in order and you have your preapproval letter, you are ready to start searching for your first home.