Homeownership gives us pride, helps secure our future, and ensures that we always have a fun “sprucing up” project to dig into on the weekends! There’s really nothing like inviting friends and family over for the first time after you’ve purchased a home of your own. However, the chasm between dreaming about buying a home and opening up that door to welcome guests to your lovely oasis can feel wide. Like all things in life, buying a home can be much easier with a little patience, a little preparation, and a clear roadmap. That’s exactly what these five crucial tips for every first-time homebuyer are going to help you with! Take a look!
Tip 1: Have a Plan for Your Down Payment
This is the most important thing you can start doing right now. You can really never save too much for your home. The rule that you have to put down 20 percent for a down payment doesn’t necessarily apply to most types of financing. You may find that you can put down anything from 0 percent to 3 percent after you get a loan approval.
However, 20 percent is a good thing to strive for before because you’ll have more options for financing at better rates without things like private mortgage insurance (PMI). Ultimately, every bit you save toward a down payment now provides you with more choice and financial freedom once it’s time to close.
Tip 2: Save for Closing Costs
The down payment isn’t the only cost you’ll be covering when you buy a home. You’ll also need to have a cushion beyond your down payment that covers closing costs like your home inspection, appraisal, escrow, property taxes, and homeowners insurance. Typically, closing costs range from 2 percent to 5 percent of your loan amount.
Tip 3: Determine What You Can Afford
It’s so helpful to know what your price range is prior to beginning your home search. The easiest way to do this is to get preapproved for a mortgage. This will allow you to know exactly how much house you qualify for based on things like your salary, savings, and debt. This is an easy, no-commitment process that lets you know what you’re really looking at.
Tip 4: Pay Down Your Debt
If you have debt, you really want to focus on getting it paid down as quickly as possible as you prepare to begin searching for a home. Lenders use something called a debt-to-income (DTI) ratio when reviewing mortgage applications to compare how much you owe every month to how much you earn. This allows them to gauge what you can realistically afford for a monthly mortgage payment. Paying off your debt is powerful because it basically qualifies you for a bigger mortgage, even if your salary stays the same.
Tip 5: Research Neighborhoods That You Like
This is a fun tip that you can cover while you’re still in the “dreamer” phase. However, it becomes crucial once you’re ready to start considering making serious offers. You absolutely have to know where you want to live. While most people focus on “falling in love with a house” like magic, you actually need to fall in love with a neighborhood first. Make a list of what’s important to you. This can be things like walkability, highly rated schools, commuting distance to a city, access to highways, access to public transportation, close proximity to stores, and close proximity to attractions.
Once you know where you want to live, you can begin to see the price range that homes go for in the area you’ve selected. This will give you a good point for comparison regarding what to expect as far as “how much house” you’ll be able to afford in the neighborhood you want to call home.
Starting Your Journey to Closing Day
The truth is that all of the many steps required to buy a house actually happen in small, easy-to-handle chunks that bring you to closing day before you know it! It all starts with preparing your financial life to get approved for a mortgage. Next, you can begin to really get serious about picking the location where you want to put down roots. With Stevens Realty in Phoenix, we want to help you find that perfect Arizona oasis where you can welcome friends and family in all your post-closing glory. We’re here to help you at any stage of the buying process! Contact us today with your questions.
We are Keith and Janna Stevens, and we’ve been in the realtor game for years now. We’ve learned a lot along the way and want to share that experience with you. Enjoy our blog, and when you’re ready to buy or sell your home, be sure to reach out to us!