Buying a home is an exciting adventure, but for first-time home buyers, it can also be overwhelming. Let's talk about 5 things you need to know before making that big purchase.
1. Know the different types of mortgage loans
FHA, VA, Conventional, ARM, and more! If you've ever looked at the types of mortgage loans out there, your head might be spinning from too much information. If you're a first-time home buyer, you might want to consider looking into an FHA (Federal Housing Administration) loan, since it's easier for first-time home buyers to qualify (Source: Zillow).
However, since mortgages can vary from person to person, it is best to talk to a mortgage professional to explore your options.
2. Know your financial situation before house hunting
How much do you have in your savings? How much can you contribute to a down payment? What is your debt-to-income ratio? What is your credit score? How long have you been in your current job?
These are all questions that come up during the pre-approval process. Make sure you have a good idea of where you stand financially before you start touring homes. Be realistic about your options, and don't be ashamed if you have to put off home-buying a little longer in order to save a little more.
3. Know your team of professionals
You don't have to go through the home-buying process alone. From the beginning, talk to a mortgage loan professional and be open to his/her advice. When house hunting, it's also important to have a real estate agent who can guide you through the process. Your team of professionals will help through every step of the home-buying process and make you feel at ease.
4. Know the costs during the home-buying process
You've settled on a house and want to make an offer. You start hearing things like "closing costs," "inspection cost," "real estate agent fees," and the sound of a cash register echos in your head.
Don't let these costs catch you off guard. Have a bit of savings set aside so that you can cover any necessary closing costs or inspection costs. Also keep in mind that you may want to do other inspections, such as a mold or lead inspection, in addition to a traditional inspection.
5. Know what you need after closing
Think about what you need to set up your new home. Set a budget for furnishings and other essentials, such as appliances and utilities. Utility companies may require a deposit or setup fee.
You might be moving into a larger space, meaning you might have more space to furnish. Make a list of what you need and what you want. You might really want that luxe department store table lamp, but you probably need a dresser. Remember-- you don't have to buy everything all at once, but you will need some items that are essential (like a bed and a fridge).
You also have to keep in mind whether you'll need to rent a moving truck or hire a moving company. Shop around with local businesses and get quotes. Quotes can vary depending on how much you need to move and how far you are moving.
You're a first-time home buyer only once, but if you know the basics, you can make your home-buying experience a memorable one (in a good way, of course)!
For more resources, check out our home financing calculators.