Today’s first-time homebuyer is faced with a variety of hurdles when trying to enter the real estate market. While interest rates fluctuate and there are signs that more inventory may be for sale soon, many buyers continue to feel the frustration in finding and financing a home. Also, student loan debt and entry-level jobs that didn’t pay a lot have made homeownership financially difficult for young potential buyers. Many have opted to move in with their parents, and since then have been saving money to purchase a home.
Although being a first-time homebuyer is exciting, it can also be frustrating. Whether you’re purchasing a home for yourself, with your spouse, or because you’re growing your family, there are a few tips to keep in mind to ensure a smooth process and the happy outcome so you don’t have to delay your decision to buy a home.
Research what you can afford
It’s important to purchase a home that is within your budget, but it’s often difficult to know what you can actually afford. Use a mortgage calculator to help you estimate your monthly payment. If you know what you can afford for rent, use that as a guide for your search to see how it translates into monthly mortgage payments. Many renters are surprised to find out they can become homeowners for about what they are paying in rent.
Save for closing costs
There can be some surprising costs when buying a home. Closing costs, or fees included at the closing of a real estate transaction, can include a number of charges such as appraisal and attorney fees, recording fees, title and escrow charges. Buyers and sellers often split closing costs, and buyers can typically expect to pay 3 to 4 percent of the cost of the home in closing costs. That means if you buy a $300,000 home, estimated closing costs will be between $9,000 and $12,000. Working with a transparent real estate and mortgage company will also help you manage costs to ensure there are no surprises along the way.
Manage debt and down payments
You may have heard that you need to eliminate debt and save 20 percent down to purchase a home. Although those are good goals, there are more flexible loan products available today for many types of borrowers. Many lenders have loan programs that make it possible for borrowers with some debt or less-than-perfect credit to attain a mortgage loan.
Housing varies greatly from town to town, and even block to block. It’s important to research the areas you want to live in to make sure you’re happy and making a good investment. This will be unique to each homebuyer, but it may be important for you to consider school boundaries, population demographics, crime rates, access to resources like public transportation and commute times to work.
A few smart steps can make first-time home buying experience easy and stress-free. With a little proactive planning and a few good resources, you’ll have keys to your home in hand in no time.
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