Finding a house that’s a perfect fit for you and your family can seem intimidating… especially when it’s your first home. Buying a house is one of the most significant investments you can make, and there are many things to consider so that you make informed decisions. This is why you need to research and know these 5 things first time home buyers should know.
1. Assess Your Debt
Before you start house-hunting, determine how much you can afford to pay for a home. A good rule of thumb is that your total housing costs should be at most 36% of your gross monthly income, including mortgage payments, insurance, taxes, and all other related fees. Consider that your monthly expenses will likely increase when you buy a home.
Remember to factor in utility costs, HOA fees, and additional costs that may come with owning a home.
To get an idea of how much debt you can afford, consult a professional financial advisor or review your credit report for clues about how much debt you can handle. Pay down debt and improve your credit score before applying for a mortgage. Doing so will ensure that you get the best interest rates and terms possible when making an offer on a home. It will also help potential lenders understand how much house you can afford and make the approval process smoother.
2. Get Pre-Approved
Being pre-approved for a loan is one of the most critical steps to take when buying a home. Getting pre-approved gives you an idea of what you can afford and how much you’ll need to save for your down payment and closing costs. It also shows sellers that you’re serious about buying, which could give you negotiating power.
To get pre-approved, you’ll need to provide the lender with information about your employment history, assets, and credit score. Make sure you shop around for the best interest rate and loan terms before making a final decision. Pre-approval can relieve some of the stress of purchasing a home and make it easier to narrow your search.
3. Research the Market
No matter where you’re buying, it’s essential to research the housing market beforehand. Start by studying the most up-to-date prices of homes in your desired neighborhood.
You should also go on a few home tours and see what features prospective homes offer—additionally, research seller incentives in the area to see if they’ll lower your out-of-pocket costs. Understanding the market will help you decide what is best for you and your budget.
4. Save for Closing Costs
Closing costs are fees associated with closing on a home, such as a title insurance, loan origination fees, and appraisal costs. Closing costs can add up to several thousand dollars, depending on the price of your home. Make sure you budget for these costs when buying a house, as they are due at closing. Asking the seller to pay some closing costs is also an option in some instances.
5. Hire a Professional Home Inspector
Before making an offer on a property, hiring a professional home inspector is essential to check the house’s condition. A home inspector can identify any potential problems with the property that could be costly in the future.
They will also provide you with a detailed report of the findings so that you can make an informed decision. Hiring a home inspector is essential to ensuring you make a sound investment in your new home.
Bottom Line
Buying a home for the first time can be an overwhelming process. To make sure you’re making the best decision for yourself, it’s essential to assess your debt, get pre-approved for a loan, research the market, save for closing costs, and hire a professional home inspector.
By following these 5 things first time home buyers should know, you can confidently make a sound investment in your first home. If you are looking to buy in the Woodinville area contact Butler & Butler for help walking you through this process.