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5 Financial Tips for First Time Homebuyers

By May 1, 2018 No Comments

The process of buying your first home can be overwhelming, but don’t let it intimidate you. The pride you’ll feel as a new homeowner, not to mention the long term financial benefits of homeownership, will make make the challenge worth it many times over. These simple tips will make the whole process easier, and will help ensure you end up in a home you love.

Get prequalified

Having a prequalification from a reputable lender is absolutely essential when you begin the process of buying a home. Unless you are paying in cash, sellers generally won’t accept an offer on a home if you don’t have a prequalification letter from a lender saying you can get the financing you need for your offer. The prequalification process will also show you what size mortgage you can qualify for, and thus help you set a price range for homes to look at.

Know your budget

Don’t guess how much you can borrow, or try to estimate closing costs on your own. Discuss the specifics with a reputable lender. And look at the final monthly costs of a given mortgage, including property taxes, mortgage insurance, and homeowners insurance.

Be realistic

Don’t assume that you’ll pay less than the asking price on a home purchase, so only look at homes that you can actually afford. Looking above your price range almost always leads to disappointment. And don’t stretch your budget beyond its realistic limits. Just because you can qualify for a mortgage, that doesn’t necessarily mean you’ll be able to comfortably afford it based on your lifestyle and other expenses.

Don’t play games with prices

Trying to sweeten an offer on a home with a higher price, and then trying to recoup costs by having the seller pay closing costs or make other concessions is typically a bad idea. The appraisal of the home needs to support the price of the offer, so if your offer is too high, your mortgage won’t be approved.

Pay closing costs

In buyers’ markets, sometimes buyers can ask sellers to pay closing costs. Unfortunately, most areas in the US are not buyers markets, and are instead stacked heavily in the favor of sellers. Asking the seller to pay closing costs will make your offer less attractive, and there’s a very good chance the seller will easily find another buyer with a better offer. If you find a home you love and can afford, haggling over closing costs just isn’t worth the risk of losing out on the home.

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