Tips That Every First Time Home Buyer Should Know

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Buying your first home is an investment in your future and, like any type of investment, doing your due diligence will help you keep the risks low. This should involve learning as much as you can about the home buying process long before you commit to your new home. In planning ahead for your home purchase, you can use these suggestions to help you enjoy a better home buying experience.

Consult a Real Estate Agent

Topping this list of first time home buying tips is finding the right real estate agent. Many first time home buyers don't consult real estate agents because they think that will add to the costs of buying a house. Buyers don't pay agents a fee, however. Instead, the agent earns a commission when you buy a house through them. If getting free insight isn't enough of an incentive, consider everything a real estate agent can do for you. They know the market and can help you find your ideal home by taking on the burden of searching listings for you. Additionally, they can guide you through the buying process to ensure you understand all of the legalities that are involved in this process.

Get Your Credit in Order

It is crucial to get your credit in order before buying your first home. This involves reducing your debt as a means of building up a better credit score. Lowering your debt is important because your income to debt ratio will play an important role in your ability to get a good deal on a mortgage. Paying off your debt will also put you in a better position for home ownership by leaving you with more disposable cash each month to handle your homeowner obligations. As you pay off each debt and make all of your monthly payments on time, your credit score will gradually rise. When you do apply to lenders, you'll find that you'll be able to get better interest rates and more flexible terms from potential mortgage lenders.

Decide if a Lower Down Payment is Worthwhile

When you utilize a government program, such as an FHA or USDA loan, you'll be offered the opportunity to put down less on your home. The traditional down payment is 20% of the home's sale price, but many government programs allow you to buy for as little as 3% down. While that sounds like a good deal, you should keep in mind that a lower down payment will require you to borrow more money. Additionally, some programs trade off a lower down payment for a higher interest rate. Be sure you fully understand the terms of your loan before you commit to anything, and decide if you really do want to put down less than 20% on your new home.

Don't Decline the Home Inspection

Most mortgage lenders require borrowers to get a professional home inspection as a part of the buying process. Even if this isn't something your lender requires, you should schedule an inspection of any property you intend to buy. The inspection won't be all inclusive, but it will cover the major components of the home. When you accompany the inspector on the tour of the home, they will point out potential problems that exist with the roof, foundation, structure, plumbing, electrical, and HVAC systems. Their findings can help you make a better educated decision as to whether you do want to buy the property. For example, they may determine that the roof is failing. If you're not prepared to finance a new roof soon after buying your home, you should consider looking for a different home.

Conclusion

Your new home is something you'll have for many decades to come. When you take the time to plan for this life event, you can ensure you'll be happy with your home purchase well into your future. That means being happy with the terms of your mortgage as well as being happy with the physical features of your home.