Are you tired of wasting money on rent? Taking the leap to homeownership is something that many of us must take as adults! It may appear a daunting task at first but working with the perfect team will make it a seamless process. Here are some first-time homebuyer tips from a local lender!
The first step in the process is to determine your desired monthly budget on your new home. You want to consider buying a home 3.5x your annual income in sales price. Next, you need to determine the desired location. You need to also think of desired school districts, backyard size, neighborhood amenities you desire, etc. Every buyer is going to have different needs and desires for their first home. You will also need to consider the resale value for the future when starting your search. And, you should consider what the market has done historically where you intend to buy.
The next step is to get set up with a local lender to help you determine your monthly budget on your new home. It is important to work with a local lender for many reasons. Local lenders typically work with many of the area real estate agents and teams and will give you a leg up when negotiating multiple offers.
Working with a local lender will provide a superior level of service over working with a larger banking institution. Local lenders only focus on mortgage loan applications and are able to close faster, more efficiently, and make the entire process much less of a headache. They will also ensure you close on time and on budget.
There are a variety of loan programs specifically designed for first time buyers! You can put as little down as 0% for USDA loans, 3.5% for FHA and 3% for Conventional First Time Buyers.
If you meet certain income criteria, then you can also be eligible for low interest rates and lower PMI options just for being a First Time Buyer. You can even qualify for Down Payment Assistance Options or Grants to buy your first home.
Typically, you don’t have to have a whole lot of money to buy a home and definitely won’t need 20% down! There have been many instances where buyers have been able to purchase homes with as little as $0 out of pocket using these special programs.
On top of the down payment, there are closing costs involved. This will entail lender closing costs, potential discount points for the loan, title policy costs, appraisal fee, credit report fee, survey costs, and other miscellaneous costs associated with the loan. The good thing about these costs is that they can potentially be paid by the seller, and you will only have to bring your minimum down payment to the closing table.
Once pre-approved, it’s time to start shopping with your real estate agent! It is important to work with an agent that is familiar with the local market. The reason being is that they will know your desired location top to bottom!
They will know the best schools, best neighborhoods, the churches, local activities, and are invested in the community. Working with an agent who is not familiar and will mean only utilizing someone to open up the doors to homes for you and someone who is basically just selling you a home for their own paycheck! This is one of the most important pieces to buying your first home.
Understanding the market and working with a local agent who is highly knowledgeable on this subject is extremely important, especially depending on the time of year. Sometimes the market can have more activity with more buyers than other times. You will see an influx of more buyers in the spring and summer vs. the fall and winter months.
You may potentially run into multiple offer situations from house to house. If it is a brand-new listing with pool, shops, etc. and more desirable, you could be faced with potentially having to go into a bidding war to win an offer. No one ever wants to have to go through this, but when this happens, it will be the best offer that wins the day! This is where a good local agent can help you construct your offer to structure the best deal. You may not always win, but knowing the market is key when this does occur, and you are in the offer process. You must sometimes be patient, as you could lose out on a house or two while searching for your first home!
Lastly, you need to go into the home buying process knowing that this is not your FOREVER HOME! You need to think of this as an investment. Homes will appreciate on average 3-5% per year.
We would suggest beginning to think in terms of your first house as becoming your first investment property. Begin to think on what it would be like to own two or three homes, and let someone else pay the mortgage down the road for you. These can eventually turn into your kid’s college funds one day.
If you plan for the future, then you will be set up for success. If you think you are ready to buy your first home, then it is time to connect with your local mortgage professional to begin your journey. The opportunity to build wealth is endless! It just takes time to build!
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