Tips for New Homebuyers
Buying your first home may feel intimidating, but many find homebuying to be an exciting and incredibly rewarding experience. To help you prepare, here are nine tips for first-time homebuyers.
Build Your Credit
Your credit score is one of the first things lenders consider when you apply for a mortgage. A good credit score can save you money in the long run. Typically, when you have a higher credit score, your mortgage rates will be lower.
It can take several months to notice an improvement in your score, so start working to improve your credit score as soon as possible. In general, paying off smaller debts and avoiding opening new lines of credit are the easiest ways to increase your score.
Consider Your Budget
It’s important to have an idea of your budget before beginning the homebuying process. Knowing what you can afford will help you prepare. When budgeting for your new home, consider your current monthly expenses, and don’t forget to factor in your down payment, closing costs and any future home repair and maintenance expenses.
Find a Realtor®
A Realtor® is a real estate professional who belongs to the National Association of Realtors®, the largest trade group in the country. Realtors® are held to a higher ethical standard and must adhere to a strict Code of Ethics.
Realtors® also have a deep understanding of their local markets and are dedicated to protecting consumers. They’re a homebuyer’s trusted partner when it comes to understanding the homebuying process, negotiating the best deal and achieving homeownership goals.
You can start with our search for a Realtor® tool.
Look for Down Payment Assistance
Down payment assistance programs can help you pay for your mortgage. There are DPA organizations in each state that offer a variety of loans, credits and grants for eligible buyers, as well as first-time homebuyer assistance programs. The Pennsylvania Housing Finance Agency offers a number of programs including grants and down payment and closing assistance.
Get Preapproved for a Mortgage
A mortgage preapproval shows that you’re serious about purchasing a home and that you have the necessary funds to do so. Getting preapproved will save you time by speeding up the purchasing process, and it will help give you a perspective on budgeting for your future monthly payments.
Keep in mind that most preapproval letters “expire” after a set amount of time. After this deadline, you’ll need to reapply and your lender will need to reassess your financial standing. Because of this, it’s a good idea to avoid making any large, unnecessary purchases during the homebuying process. You can always ask your Realtor® or your lender for guidance on this.
Shop Around for a Mortgage Lender
Although you may be preapproved through one lender, that doesn’t mean you’re committed to that lender. You can do more research or ask your Realtor® if they have any trusted recommendations. Interest rates and repayment terms vary from lender to lender, so don’t be afraid to explore your options.
When looking for a lender, consider minimum credit requirements, special assistance programs for first-time homebuyers, down payment minimums, repayment terms and online presence.
Make a Priority List
Before you start looking at listings with your Realtor®, it’s important to make a list of the top features you’re looking for in your new home and to organize them according to importance. This will give you and your Realtor® a better idea of the type of home you’re looking for.
What are your must-have items? How many bedrooms and bathrooms do you need? Do you prioritize square footage or a shorter commute? How important is the location to you? Do you want to live in an established community or are you looking for an up-and-coming area? These are just a few questions to ask yourself.
Think Long-Term
Buying your first home is an exciting and overwhelming time. Don’t forget to think long-term. When looking at potential homes, consider what will be best for you right now, but also consider what the value of each one may be in a decade. How likely is it that you’ll sell in the future? Will the value increase significantly? If a home needs renovation but is in a neighborhood with increasing property values, it may make sense for you.
Be Patient
It’s important to remember that buying a home is a long-term commitment. Make sure you take your time to think things through and ask questions.
If you feel like you may have found your dream home, take a step back and evaluate it with your list of priorities. Does it meet your requirements, or is it just filled with flashy appliances or in a trendy neighborhood?
When you’re ready to begin the homebuying process, search for a Realtor®.
