Figuring out your finances
If you’re still in the early stages of the homebuying process, you’ll want to start saving money for a down payment. Many loans offer a small down payment percentage these days, but $10,000 or $15,000 is still a lot of money. Of course, since a credit check is such an essential part of being approved for a mortgage, you’ll want to make sure to improve your credit score ahead of time by working to clear your debts.
Be sure to plan ahead and calculate whether you’ll realistically be able to afford paying the mortgage long-term. Potential homebuyers should never plan their purchase based on a promotion or new job that hasn’t materialized yet. And remember, even if you have enough money for your mortgage payments, there’s a lot more money that will be spent on the house, including renovations, appliances, taxes and more.
Choosing a buyer’s agent
Choosing a compatible buyer’s agent is an essential part of the homebuying process. If you don’t get along with your agent, it will be tiresome to complete the process, at best. Make sure he or she is knowledgeable about the area and has a good track record. Choosing a licensed agent is also a good choice, because he or she will have much higher standards for performance. A compatible agent will make the process of choosing loans, negotiating and more so much easier.
Working with a mortgage lender
When deciding on a lender for your mortgage, make sure you compare rates from three or more lenders. This will allow you to study your options and save money in the long run by choosing the best deal. Also, a preapproval letter from a lender can give you the upper hand when negotiating with a seller. Essentially, the lender verifies ahead of time that your finances and credit are in good shape, and you can definitely use this to your advantage with the seller.
Choosing the perfect home
You’ll want to decide if you want a family home or if living in a townhouse or condo is a better option. Both have their perks; a family home will be more spacious and you’ll have your very own plot of land, but a condo offers less home maintenance to deal with. If you’re keen on a certain home, you’ll want to schedule as many home visits as possible to find out as much information about the property as you can. Explore every nook and cranny and don’t be afraid to ask critical questions to the agent.
Choosing the perfect location
The area the home is located in should be just as important to a homebuyer’s decision as the property itself. You’ll want to do extensive research on the nearby stores and establishments that you plan on frequenting. It’s important to research the local school system, even if you don’t have kids, as this can have a major impact on taxes and the home’s value. And of course, research crime statistics to make sure it’s a safe neighborhood!
Homeowners insurance for first-time homebuyers
Homeowners insurance should be an important element of any homebuyer’s plan. If the home is destroyed or damaged in a fire or a natural disaster, the insurance will help cover the costs. You don’t want to invest so much of your savings into homebuying only to lose your house. AAA homeowners insurance is a great choice for any first-time homebuyers, and provides some of the best rates around.
How to know if you’re really ready to buy a home
When should you not buy a home? If your finances aren’t in order, it’s definitely not a good idea. If you feel like you might want to move somewhere else in a few years and are not exactly sure that you want to settle down in one place, it might not be a wise investment either. If you aren’t 100 percent confident in your decision, wait until the future to start your homebuying journey.
That being said, if you’re ready to settle down, have solid finances, and have fallen in love with a home and location, it might be time to put down that first payment!
Have any other essential tips for first-time homebuyers? See how AAA might be able to help you buy your first home.