First-Time Home Buying: 5 Important Tips for Buyers in 2023
While the real estate market experienced whiplash these last year years, many Americans still begin their foray into first-time home buying. Home buying can be complicated in its own right.
However, coming off the COVID-19 pandemic, quite a bit changed throughout the housing market. Regardless of those changes, following age-old advice goes a long way, even heading into 2023.
Explore Financial Options Prior to First-Time Home Buying
Prior to beginning the process as first-time home buyers, prospective owners tend to share many of the same questions regarding finances. Being able to identify the mortgage rate, approval amount, and monthly payments are just three of the first few items that tend to come into play.
As potential buyers, there are plenty of online resources, such as these forms of assistance available to first-timer homebuyers. Additionally, many mortgage lenders and government agencies offer unique programs. Some of these include:
While not everyone will qualify, these resources show just a handful of the many resources available to potential first-time home buyers.
Obtain Mortgage Pre-Approval Prior to House Hunting
After reviewing some of the aforementioned online resources, most Realtors typically prefer to see pre-approval prior to showing a property. As part of the preparation process, pre-approval indicates to Realtors that a person will have the funds to move forward in the event they like the property.
Essentially, this brief application indicates that a person has mortgage financing lined up. That way, both parties can ensure that the conversation is a good fit prior to moving forward.
Understand Your Credit Situation as First-Time Home Buyers
Similar to pre-approval, understanding your credit score offers additional insight into a person’s prospective purchasing power. Furthermore, a high credit score usually coincides with a lower mortgage interest rate, meaning a lower monthly payment.
Notably, many conventional loans have first-time home buyer mortgages, often requiring as little as a 3% down payment. For those with a credit score below the “good” range, it might be advantageous to take the time to build it back up. Doing so, saves money on interest down the road.
Determine a Down Payment as First-Time Home Buyers
Just as with any other big purchase, working through a budget reduces stress throughout the real estate closing process. When deciding on a budget as first-time home buyers, consider factors, such as earnest money, the down payment, and closing costs. For many first-time buyers, the last factor might come as a surprise.
Having said that, confirming a budget in advance also generates a big impact on your mortgage. Generally speaking, if the rates you’re getting with a smaller payment are too high or you can’t find the right deal, you’ll need to save up more for a larger deposit. If you’re just doing exploratory research on home buying, it might be a good idea to assess your situation right now and build a savings plan for the future when you are actively looking.
Consider All the Costs Related to the Real Estate Closing Process
As mentioned, closing costs might come as a bit of a surprise to first-time home buyers. Usually, closing cost expenses include:
Inspections
Closing
Taxes
Title insurance
Fees for appraisal and escrow
Realtor costs
Buying a home isn’t just putting down your deposit, there are a lot of other costs that go into home buying that first-time buyers need to be aware of and budget for.
Begin Your Journey into First-Time Home Buying with Lee Scott Perres, P.C.
Buying a home for the first time can be a daunting experience. Deciding on a budget, checking your credit, finding a lender, finding a home, and completing all the smaller, necessary tasks can be a lot to handle.
That’s why it pays to be prepared, create a plan, and know exactly what you need to do before setting off on this path. To begin your journey into first-time home buying, schedule an appointment with the real estate attorney at Lee Scott Perres, P.C.
