Buying your first house is an exciting step in your life that requires a lot of saving, planning, and building (just not physical building unless you’re building your own home). With buying your first home you will likely encounter a lot of things you have never had to deal with beforehand.
These things would be thinking about setting a budget for buying a home, dealing with mortgages and loans, talking to a real estate agent or realtor, and even negotiating with the seller to get your home. Regardless of how experienced or inexperienced, you are with the task of home buying, here are five things you need to know before buying your first home!
Think About the Budget You Will Have
Let’s face it, buying a home is an expensive task. It will require you to make a down payment and take up either a loan or a mortgage with interest for you to acquire the land and the building on the land. For you to be able to afford the down payment in general, you have to set a budget.
This budget will account for how much you plan on spending on a house, or how much you are willing to spend. If your budget is five hundred thousand then you wouldn’t want to buy a house worth seven hundred fifty thousand. But if you said your budget was five hundred thousand give or take fifty thousand, you’d be willing to go fifty thousand higher or lower.
This will give you great insight into your mortgage and how much you can pay off with a down payment. You may not have a huge down payment saved up. However, you can look for mortgages that don’t require down payments. Just keep in mind that this may reduce the amount you can spend on a home.
Credit Means Everything to Loans
A very important aspect you are taught about finances and money from your economics class in high school now is the importance of Credit. And yes, credit means everything when you are trying to get a loan or mortgage.
Credit shows to the financial company how likely and trustworthy you are to pay the money back that you owe. This is built up over time through the use of credit cards, paying off bills, loans, and many other things. It can be easy to build credit if you can manage your finances correctly, however it can also be very easy to destroy your credit with one wrong loan.
The better your credit, the better rates you will get on your mortgage. Keep that in mind when you are comparing rates and other aspects of your home buying process.
Explore all the Options you have Available
You should always explore each option or choice you have available when you are choosing to purchase your own home. This isn’t some small investment after all, and more likely than not this will be the home you will be living in for many years to come or even to your retirement.
The best part about viewing other options you have before making your final choice is that you can usually look at every option for free. This allows you to make the best decision for your needs, and this can be done through comparing rates, homes, realtors, sellers, buyers, and many other things.
Always Compare the Different Rates and Offers
Just like how it is always better to view each option you have, you should also look at all the different rates you can be offered from different banks. Because your credit score is shown through two different credit companies, sometimes even three, you will get different kinds of offers and rates based on each credits level.
While it may seem redundant to explore all options and then compare rates, just remember that not all banks offer the same amount of interest levels. Every bank has its design, and some credit unions are there to serve the people and ensure they are getting the best rate possible, with others are trying to make money for themselves.
Negotiation is Always an Option
Keep in mind that just because a realtor wants to sell a house for a certain amount doesn’t mean that that amount is set in stone. Often the person who is selling it is willing to let go of it for a certain price, and the realtor wants to make money off of this deal so as their fee they get whatever money remains after the sale.
This means that you can negotiate with the realtor or agent to see how far they are willing to let the home go, so they can still make a decent amount of money while getting the correct amount to the owner in general. While this can also be dangerous or met with a brick wall of resistance as some do not want to negotiate a price, many are willing to discuss and talk out how much they are willing to sell it for.
Keep in mind this does take some charismatic skills and knowing how to talk to people to score a better deal. So don’t try to negotiate if you don’t know what you’re talking about.
Buying your first home with Confidence
With that in mind it is important to keep these five things in mind when you are seeking to purchase your first home:
- Try to imagine the budget you are willing to spend on this house
- Keep or build great credit to allow you to get amazing rates
- Always explore each option you have before making a choice
- Don’t forget to compare your rates of loans or mortgages with other banks or financial institutions
- You can try to negotiate for a better price you if desire
When it’s your first time for anything, you are likely to have a lot more questions and be nervous about what you are doing or how to do it. And when it comes to doing something new that deals with a large sum of money, it can be even more nerve-racking.