10 Secrets Every First Time Homebuyer Should Know

1. Get professional help

Housing counselors credentialed through a nonprofit agency provide objective advice and unbiased recommendations.

2. Get your finances in order

Find out what your credit score is and correct any inaccuracies. Your credit score will determine your ability to borrow money. It is important that you understand what a lender is looking for and what counts most in your favor regarding your finances so that you are prepared to get the best mortgage loan package available to you.

3.  Look for down-payment and closing-cost assistance programs

The down payment is the amount of cash you pay toward the purchase price. Closing costs are expenses over and above the purchase price of a home that you incur by financing and transferring ownership of the home. While normally both are expected to be paid upfront, there are loan programs that allow you to borrow the down payment and closing costs, or at least part of them.

4.  Make sure homeownership fits with your lifestyle

There are some situations where renting may be a better financial situation than buying a home. If you will be in a particular community for less than 3 years, if the local economy is not doing well, if unemployment is rising, or if your future income will not provide you with enough for mortgage payments and other financial responsibilities to owning a home, then renting may provide the better option.

5.  Shop around for everything related to your home purchase

Finding a good loan, the right home, and reputable professionals can save you thousands of dollars. Follow the “rule of threes” by comparing at least 3 products, professionals, or services before making your final selections.

6.  Get pre-approved for financing before shopping for a home

Pre-approval will help you know exactly what you can afford and find the best rates and terms in advance of the purchase. A pre-approval is a guarantee that the lender will loan you a fixed amount of money, as long as the property appraises over the amount for which you are qualified and you buy within a certain time period.

7.  Carefully select a location

Research schools, property taxes, insurance rates, and crime statistics. When you buy a home, you are making an investment, and the neighborhood is a prime factor in determining how good an investment you home turns out to be. Spend time thinking about things that may be important.

8.  Get a professional home inspection

When you make an offer to the seller to purchase a home, you should include a condition, or contingency, for a home inspection that indicates no major problems.

9.  Don’t rush!

Sometimes enormous time pressures are put on the homebuyers to race through the deal. It is easy to be blinded to ‘bad ideas’ when pressure is applied by different parties. Purchase contracts and loan documents are legally binding documents. If you are rushed to sign the documents, you could get locked into prices or terms that are not in your best interest.

10.  Homeownership always costs more than you think it will

Many first-time homebuyers are surprised by the cost of basic maintenance. Financial experts recommend building an annual emergency fund that is equal to 3 months worth of living expenses.