Buying a home for the first time can be an exciting, but nerve-racking experience. Millennials are making up the biggest group of home buyers and for many, this is their first time. With a little research, the stress of buying a home can be put at ease. Here are a few tips that can help you buy your first home:
1. Know your market
It’s best to know your market before you buy. Asking prices are not always indicative of their real value. Scope out the market in the surrounding areas or even research recently sold homes on the same street. Also shopping around can give potential home buyers a better sense of what a home’s worth is.
2. Know what you want
Before you start looking for a home, sit down and make a list of what you would like in a home. Also, categorize your list by preferences because finding a home with exactly everything you want can be almost impossible. Knowing what you want before you begin looking for a home will save you time and effort, but also conveying your ideal home to your real estate agent will help him or her better serve you.
3. Know your credit score
Having the right credit score is crucial in scoring the right mortgage rates when buying a new home. It’s best to know your credit score ahead of time because if it’s not where you want it to be you can always improve it. Although having a good credit score is important when applying for a loan, it is not the only factor. Lenders also look at your current income along with employment history, monthly debts, and the size of your down payment. So don’t be discouraged if you credit score is low, you can increase it with time, but it’s better to know where you stand sooner than later.
4. Know what you can afford
Knowing what you can afford before you start looking can save you time. Being more realistic in your search for your new home will be beneficial to everyone in the long run. Take your monthly income and compare it with your monthly debts. Don’t forget to add in your down payment plus any possible fees like property tax, homeowner’s insurance, or homeowner’s association dues. An old standard for fixed debt to income ratio is 28%. This means your housing payments should not exceed 28% of your monthly income, but some lenders are allowing for as much as 45% nowadays.
5. Work with a local agent
Figure out where you would like to live and then choose an agent that works in the area. Agents know the ins and outs of neighborhoods, discussing your goals with them will help narrow down the right home for you. Agents that work in the area have an understanding of fair market value when you’re choosing your home. Find an agent you can trust that has years of experience in your desired area. Having the right agent can really make or break your experience as a first-time buyer.