This year saw an increase in the prices of properties all around the country. This may have been due to the fact that the number of people wanting to buy houses far exceeded the number of people willing to sell. These conditions mean the more experienced homebuyers are more likely to beat the first-time homebuyers to the house because they are more prepared to close a sale immediately an attractive one appears.
It’s easy for a first time home buyer to get overwhelmed due to all the processes that he/she will be required to follow.
If you’re looking for first time home buyer tips for 2022, you need to get solid and valid information because, although the market conditions may become a bit more stable than what we have seen in 2021, there is no certainty that there will be a decrease in the competitiveness of buyers in the market. This makes it important for concrete home buying tips to be available to potential first-time home buyers.
Getting into the world of real estate may not be easy for a first time home buyer and that is why in this article, we will like to show you a few tricks and tips about homebuying 101. You can consider this a crash course for first time home buyers.
As a first time home buyer, here are some of the things you shouldn’t miss.
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Find out the prices ahead of time
This is an essential part of home buying 101. You can’t buy a house without knowing the price of the house. Some things could affect the price of houses:
- Location: Houses in great locations cost more than similar houses in locations that are not as good.
- Demand and supply: If the houses available on the market are fewer than the number of people looking for houses, the prices will be higher and if there are many houses on the market, the prices are usually lower.
- Time of the year: This goes hand-in-hand with the above. Not many people are looking to sell their houses at this time of the year so the prices are higher because the supply is lower than the demand. More people wish to sell their houses around spring so this may affect the prices, making them lower.
Checking out the prices beforehand gives you an idea of what to expect in the market and so that you can plan your budget accordingly.
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Make sure you have a good credit score and that your finances are okay.
Improving your credit score is also one of the things to know for first time home buyers. Ensuring that your loans or bills are paid on time helps your credit score and if you have a high credit score, you are more likely to get a home loan faster and also have lower interest rates.
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Save money up for a down payment, closing costs, and moving expenses
If you’re taking a home loan, you need to note the entire cost of your house is not covered by your lender. You will be required to pay a percentage up front and the rest of the money will be paid for by the lender and you will pay back in monthly installments spread out over some years. The percentage of down payment required depends on the kind of loan you’re taking and your credit score.
- For conventional loans, you can have a down payment as low as 3% if you have a credit score of 620 and above.
- FHA loans allow a minimum down payment of 3.5% if you have a credit score of at least 580. For those with credit scores between 500 and 579 the minimum down payment is 10%
- VA loans allow currently serving military personnel, veterans, or the surviving spouses of dead military veterans to get a loan with 0% down payments with a minimum credit score of 620.
So, saving up for your down payment is an important home buying tip especially for a first time home buyer. The aim for most home buyers is to be able to set aside a down payment that is up to 20% of the home value.
Aside from down payments, the closing costs (which are typically made up of the appraisal fee, home inspection fee, property taxes, some insurance, and legal fees) must also be considered. These costs could be between 2-6% of the final sale price.
Also, moving expenses can set you back a few thousand dollars so it is not a bad idea to set aside money for that as well.
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Look for good mortgage rates and get pre-approved
To get a house you may need to apply for a mortgage to finance your purchase.
Some good mortgage tips for first time home buyers include:
- Comparing the mortgage rates of different lenders will help you get a favorable rate. The mortgage rates are made up of 3 components: The interest rate, annual percentage rate(APR), and the estimated monthly payment. Compare these components from different lenders and arrive at a rate that is perfect for you.
- Make sure you get pre-approved before you begin house-hunting so that the buyer sees that you are serious than the competition.
- Putting a higher down payment also makes the process of getting your loan faster and also increases the confidence the seller has in you and your finances.
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Hire a good real estate agent
Again, this is an essential part of home buying 101. A good real estate agent has a great knowledge of the market and is very good at negotiating. He/she will also give you valuable home buying tips and ensure that the transaction goes smoothly from start to completion. It is their job to manage the entire home-buying process to ensure that you do not make any errors.
It is even better if you hire a good real estate agent in the area where the house is located. Real estate agents have good knowledge of the area and also share information about their findings with each other. Some agents are more experienced being buyer agents so it is also worth looking for those agents for hire. A good agent with adequate knowledge of both the buyers’ and sellers’ market is Tammy Gazda. She is smart, shrewd, and experienced, and she will put her adequate knowledge derived from over 20 years in the real estate business to work on your behalf. Call her now at (480)-848-7173 or take a look at some exclusive properties available for sale here.
As a piece of friendly advice, it is never a bad idea to establish great communication between yourself and your real estate agent.
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Go for houses below your budget so you have the flexibility for bidding
With the competition in the market between buyers these days, it is normal for prices to be higher than the original asking price. You have to be ready to outbid competitors. Going for a house that is below your budget will give you this extra room you may need to get rid of competitors, and even though you don’t need to, it never hurts to have a little money left over from your purchase.
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A home inspection is very important
Of all the tips for first time home buyers, this may be the most crucial. Under no circumstance should you ever skip the final home inspection.
A home inspection allows you to assess the full condition of the house. Are there leaky pipes? Do the walls have water damage? Are there electrical faults? As a first time home buyer, these are questions that you definitely want answers to because they will expose faults in the house you are about to pay for. This can lead you to negotiate lower prices so you can free up cash for making the repairs or you can ask the seller to take care of the repairs before you purchase.
These home buying tips will help any potential first time home buyer save money, time, and be more efficient in 2022 and beyond.
For more information, contact Tammy at (480)-848-7173.