Home Buying Tips for First-Time Buyers

Being a first-time home buyer can be daunting. Check out our home buying tips for your search and find out what to expect during the process.

The real estate market is still booming across the United States, with home prices up to 22% higher than in 2019. 

Increased housing prices are a deterrent for many first-time homebuyers, but that doesn’t stop you from planning your first purchase while you wait for the inevitable decline. 

Check out these home buying tips for a successful journey to homeownership when the market slows down. 

Familiarize Yourself With Your Credit Report

Many lenders offer attractive packages for the first-time homebuyer, but there are a few things they’ll check first. 

Your credit score is important, but they’ll also look at your credit report. This indicates your overall financial health and your payment habits. 

These two aspects help the lender determine what interest rate you qualify for and whether they can risk offering you a loan. 

Review your report regularly, and adjust your behavior to portray your payment behavior in the best light. If you notice any mistakes on your report, notify the credit bureau immediately, so they can rectify them before you apply for a mortgage. 

Home Buying Tips to Determine Your Budget

Review your monthly income and debts. This will give you an indication of how much you can afford to spend on a mortgage, and help you figure out your home buying budget.

If you pay less than 20% of your income on debt, you can afford a house that’s worth four times your income. Don’t consider houses worth more than three times your monthly income if you pay more than 20% of your salary toward debt.

If you’re debt-free, you can shop for homes that cost up to five times what you earn monthly. 

You can also look online for a mortgage calculator to figure out how much you can afford to repay. 

Once you’ve determined your budget, stick to it. A mortgage is a long-term commitment, so you can’t afford to gamble in this regard.

Save For a Down Payment First

Every home purchase requires a down payment. This upfront outlay often comes as an unpleasant surprise to the first-time homebuyer. 

Usually, the down payment amounts to around 20% of the home’s price, and it can take up to six years to save enough money. It’s unwise to take a separate loan for this expense. 

Paying this amount in cash will save you a ton of interest down the line, so it’s worth trying to save up for it before you start inquiring about homes for sale. 

Rather, cut back on your spending now, and put that money in a brokerage account or high-yielding savings account. These savings products help you grow your money faster.

Plan for Every Eventuality

Armed with these home buying tips, you’re less likely to encounter unexpected hiccups along the way when you buy your first home.

Take your time researching this important decision and work with a reputable real estate agent to guide you in your decision.

Would you like to find out more about real estate, saving, or budgeting? Browse our blog for the best information on a wide range of related topics.