First-Time Home Buying 101

It’s official: Mortgage rates have again hit an all-time low. With rates falling and inventory levels building, there’s never been a better time to buy your first home.  There are a lot of good deals out there, but you need to make sure that you know what you’re doing so that you don’t overpay or regret your purchase later.

Here are a few tips to help you navigate the first-time home buyer waters in a successful manner:

Ready Your Finances

Buying a home is no easy feat if you’re not truly financially ready to do so. Months before you decide to officially begin your house hunt, you should be getting your finances ready.

One of the best things to do during this time is to calculate how much home you honestly can afford. Run some figures on one of the multitude of online mortgage calculators and then practice living that way–if your rent is less than your projected mortgage payment, send the difference to savings. Also count on increased utility payments, condo fees if you’ll be purchasing something other than a single-family home, insurance premiums, and general maintenance (after all, you’ll no longer be able to rely on a management company or landlord if your water heater breaks in the middle of the night).

Once you’ve been able to comfortably live with this figure, you’re one step closer to homeownership.

Run That Credit Check

If you’re not already doing so, you should definitely be monitoring your credit report. While scores vary between the three major credit bureaus (TransUnion, Experian, and Equifax), it is beneficial to have a ballpark figure of where your score lies on the spectrum of how creditors rate their customers.  You can get your score for free from companies like Credit Karma.

Make sure to check your credit report for any errors and if you find some, you need to file the necessary disputes/submit information to get these taken care of ASAP. Whether you like it or not, your mortgage rate will be directly related to how high your credit score is so you need to do everything in your power to keep it as high as possible.

Consider Playing the Foreclosure Lottery

Don’t discount the foreclosure market, especially given that it’s one of the fastest-growing segments in real estate right now. With ample research and due diligence, you can find a foreclosure property that not only meets your list of required amenities but one that also will increase your net worth and get you on track with maintaining an ample amount of equity in your property.

Get a Great Agent

When you’re buying a home for the first time, education and research are two of your greatest allies. Additionally, choosing the correct agent is a great way to set yourself up for a much easier purchasing process. Tips for choosing a real estate agent include finding someone who’s licensed, can provide recommendations from satisfied customers, and is well-versed in the type of property you’re seeking.  The can also help you through road-bumps, such as if your home appraisal is wrong and you need to appeal.

Home Inspections are Mandatory!

Anyone who has seen HGTV’s Holmes Inspection knows the horrors that can lurk in a seemingly beautiful home. Regardless of your DIY expertise, there’s no way you should ever forgo a home inspection.

Not only do they give you an “out” after you sign the Purchase & Sale agreement if issues are found with the house, but they give you a better idea of what you’ll have to invest in the property beyond the purchase price and closing costs. Do yourself a favor and seek a licensed, experienced home inspector who will tour your potential home with a fine-tooth comb.

Expect to pay upwards of $200 – $500 depending on the size of your home.

Celebrate the Process

Buying a home is a wonderful yet stressful process. Make sure to slow down when things get crazy so that you’re fully able to appreciate–and enjoy–every step of the way. And remember that even if the “dream” house you’ve found doesn’t actually end up being yours, your home is out there. Keep a smile on your face and celebrate finding it to the fullest. After all, you only get to be a first-time home buyer once!

 What tips do you have for first-time home buyers?