Buying a home is daunting as it is. Buying your first home in a hot real estate market is on another level.
Inventory is down by about 23%, demand is up, and people are coming in with cash offers. It’s enough to make you want to wait to buy a home.
If you’re thinking about buying your first home, you’ll want to keep reading. These are the top home buying tips to get you into your first home.
1. Get Your Financials Together
Your ability to buy a home hinges on your ability to get financing. You’ll need to have a number of financial pieces together before you look for homes.
Be sure to pull your credit report because you don’t want any surprises to hurt your chances for approval.
You’ll need to have a budget in mind for a home. Look at your income and expenses. Determine how much you can spend on your home, including insurance, mortgage, and maintenance.
2. Learn Your Local Market
You want to make sure that your real estate investment grows over time. Home values are incredibly high right now.
Buying in this market is risky because those home values can drop. That leaves you underwater, where you owe more for the mortgage than the home is worth.
The local market has a lot of valuable data to help you determine if the home is in the bubble or not.
Look at the local Multiple Listing Service, the association for Realtors, and agent sites like Stroudandassociates.com.
They’ll have sales data by zip code, the median price of homes, and how long homes are on the market.
3. Work With an Agent
First-time homebuyers always should work with an agent. That’s because the home buying process has so many challenges.
An agent will go to bat for you to make sure you get the home that you want at a price that you can afford. They’ll negotiate offers and help your offer get accepted in a crowded market.
4. Save for a Down Payment
You’ll need to have a down payment for your home. The down payment is necessary to get your home loan approved.
Lenders expect you to take on a certain amount of risk in the transaction. You can get an FHA loan, which only requires a 5% down payment.
There are also grant programs that are designed to help first-time homebuyers get the down payment.
5. Don’t Forget About Closing Costs
Closing costs are paid to the lender when you sign the paperwork and get the keys to your new home.
They can be quite a shock if you’re not prepared for them. Closing costs range from 3% – 5% of the amount of your loan. For a $200,000 loan, you’re looking at $6,000 to $10,000.
These numbers have to be added to your initial homebuying financials.
Buying Your First Home Is Exciting
Do you dream of buying your first home? It may seem like a stretch because this housing market is so competitive.
These tips for first-time home buyers show you how to prepare for a hot real estate market. Head over to the home page to find more valuable real estate tips.