Buying a home isn’t as easy as setting up a showing and writing an offer. If you are considering purchasing a home, you’ll need to do some legwork first. Here’s what first-time home buyers need to know before beginning their home search.
What First-Time Home Buyers Need to Know Before Making an Offer
Current Housing Market Conditions
Before you start looking for a home, it’s important to read up on the current housing market in your area.
Here’s what first-time home buyers need to know: it’s tough out there. The housing market is highly competitive because of low supply and high demand. You will probably be one of dozens of people putting in an offer on each property. Expect some rejection (okay, maybe a lot of rejection). First-time home buyers need plenty of patience in this current housing market.
Your Credit Score
First-time home buyers also need to know their credit scores before starting the home buying process. Your credit score determines whether you can qualify for a mortgage, what mortgage products are available to you, and what interest rate you’ll pay.
If you have a less-than-stellar credit score, it’s best to improve that score before starting the home buying process. A better credit score will make you more competitive against other buyers and will save you thousands of dollars in interest over the life of your loan.
Financing Options
When buying a home, first-time home buyers have several options for financing. Start by contacting a lender to learn more about their products. Some first-time buyers might be eligible for FHA loans or other government-backed loan programs. Veterans can access their VA loan benefits. Others might pursue conventional loans that require larger down payments but have lower interest rates.
Read more about popular financing options here.
Your Wish List (And Know if It’s Reasonable)
It’s great to dream, but it’s also crucial to be realistic when it comes to buying a home. Certainly, first-time home buyers should create a wish list and look at homes with that list in mind. However, you should also speak with an experienced Realtor, share your list with them, and ask if your “must-haves” are reasonable given your budget.
It’s also important to rank the items on your list. What are the “must-haves,” the “want to haves,” and the “would be nice, but don’t necessarily need-to-haves”? Naming and ranking your priorities can help you narrow your focus when looking for a home.
However, you should also keep an open mind. As we’ve mentioned, the housing market is competitive. The house that checks all your boxes probably checks the boxes of many other buyers, too. If you’re unwilling to wait until you find the perfect home and get your offer accepted, you might have to settle for something not quite as perfect.
How the Home Buying Process Works
When real estate agents are asked what first-time home buyers need to know, this is often at the top of the list. The home buying process is just that – a process. Getting an offer accepted is one thing, but there is much more to home buying than simply entering into a contract. There are many moving pieces, each representing a different hurdle to overcome.
It’s not uncommon for the home buying process to take 30-45 days or more from start to finish. The more you understand the process up front, the easier it will be for everyone involved.
Your Budget
Current market conditions make it difficult for first-time buyers. Inventory is low, prices are rising, and corporate buyers keep jumping the line to purchase investment properties. If you’re desperate for a place to call your own, you might be tempted to raise the price ceiling or offer more for the next house on the market.
However, being house-poor is never worth the stress. Before you start looking at homes, know your budget, and stick to it. You might have to bid on several houses before an offer is accepted, but your sanity – and your bank account – will thank you.
Where to Find a Good Real Estate Agent
Do you really need a real estate agent? Yes! Having an experienced and knowledgeable Realtor on your side can make the home-buying process much more successful.
A good real estate agent can help you navigate your first home buying experience. Ask for recommendations for friends or family or check local listings and reviews. You should always interview real estate agents; don’t hesitate to interview several before deciding.
Did you recently buy your first home? We want to hear about it! What do you wish you had known before starting the home buying process? Share your thoughts in the comments.
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