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Often the idea that you can own a home is a much stronger idea than the practicalities behind the purchase. 

Not everyone is buying a home to live in – not ever first-time buyers. Instead, you could be looking to make smart investments, build generational wealth, or secure your own financial future. 

Whatever the reason, here are some tips for new home buyers. 

Commitment

Buying a property sounds great, but committing to loan repayment for 25 years? On average the term for a mortgage is between 15-30 years, and if you’re not living in the house yourself, you’ll still need to pay that back. 

Ask yourself as you browse what’s on the local realtors pages, are you ready to commit to the financial obligations?

You need to be sure that this is the route you want to go down because otherwise, it can be an expensive loss.

Pre Approval

You might choose to skip the preapproval and start looking for houses, but really you should be walking into the viewings knowing that you can act quickly if you need to. 

Preapproval and prequalification are different – preapproval is an approval document that covers how much you could get and is based on your current financial information. A prequalification is an estimate of how much you could get. 

The preapproval will tell you precisely what you have available and can help you speed up the process. 

Credit

Once you have decided that you will move forward with buying a house, it is not the time to try and open more credit accounts. Each of the accounts you open or attempt to open will have an impact on your credit score. 

The soft and hard checks are visible to your mortgage lender, and they can negatively impact your chance of approval. 

You should also look to pay down any debts and make sure that if there are any issues with your credit score, you contact the relevant agencies – to have them corrected. 

Loan options

While we use the term mortgage, this covers a wide range of different options. It is your job to make sure you understand how each choice impacts your borrowing. 

You will be choosing between: 

  • FHA loans
  • Va loans
  • USDA loans
  • Conventional loans

Each of these options will change what you need to pay in terms of a deposit, and some will require you to be in the military. There are loan options for most circumstances – including ones for bad credit. 

Final costs

There are always a few costs that surprise many new homeowners. The deposit is just a single slice of the pie. You will need to factor in: 

  • Pest inspection fees
  • Appraisal fees
  • Escrow fees
  • Title insurance expenses
  • Discount points
  • Moving costs
  • Connection costs

You will see these itemized on a closing disclosure for anything related to the closing fees. It can be up to 5% of the total closing costs. As a first-time buyer, you might enjoy some of the government schemes that cover a portion of the closing costs – but don’t rely on it, instead ensure you have the cash set aside. 

There are plenty more ways that can save you cash on moving home: How To Save Money When Moving Home. 

 

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