Buying a home is among the most exciting moments we will ever experience, as it represents a new and important chapter in our lives. But it can be an incredibly daunting process as well, especially for first-time buyers that might be overwhelmed by the entire prospect. To help make this journey a more pleasant and successful one, here are some important pieces of advice every buyer should know when purchasing a first home:
Begin saving for a deposit early
In order to purchase a home, you will have to save for a deposit. While the average mortgage deposit is still around 20%, it can be as little as 3%-5% depending on your area and any government assistance programs that might be available to you. However, keep in mind that the larger sum you manage to save for a deposit, the wider range of options you will have, and the better loan terms and rates. When determining the amount you need to save, compare the average prices of homes you can reasonably afford, and calculate a percentage from there.
Go through financing options
Once you’ve saved enough or a downpayment, the next step would be to choose a financing option that matches your needs the best. In terms of mortgages, there are a wide variety of solutions available, from traditional mortgages to loans guaranteed by the government. The specific eligibility requirements and downpayment percentage will depend on the loan itself, as well as your location, which is why it pays to do thorough research on all the solutions that are currently available to you. You will also have a variety of options when it comes to the terms of the loan. Most first-time buyers tend to opt for fixed-rate 30-year mortgages due to the length and continuity of interest rates.
Understanding closing costs
As you already know, getting mortgage isn’t free. Closing costs are usually come as an unpleasant surprise. They include fees and expenses you have to pay when finalizing your real estate transaction. Both participants (the buyer and the seller) must pay certain amount. The average costs goes from 2% and 5% of the loan amount. The total closing costs paid in a real estate transaction vary widely, depending on a type of loan you take and where you live. But the good news is that you may be able to negotiate for the seller to pay for all or part of your closing costs as well.
Understand additional costs
Apart from insurance, buying and owning a home can also come with a number of hidden costs many new buyers fail to take into account. During the buying process, there might be certain removal costs, taxes, legal fees, and surveys you need to consider. Similarly, homeownership will also come with additional expenses, whether it’s service charges, mortgage payments, or ongoing maintenance costs. It’s important to be aware of all unexpected expenses of home buying and take them into account when purchasing your first home, to ensure you can comfortably afford to become the owner of your desired home.
Consider the costs of insurance
When buying a home, insurance will be another big consideration. In particular, finding great home insurance options will be essential, as this will allow you to protect your new home and its belongings from damage, theft, loss, and outside elements. For that reason, it’s important to choose the best insurance rates and solutions that truly suit you and your home. If not, insurance could be a particularly large monthly expense you will need to additionally budget for.
Choose your home carefully
The final step would be to finally select the home of your dreams. Start by weighing the pros and cons of various neighborhoods and different types of homes, depending on your budget and lifestyle. A single-family home, for instance, will likely be more expensive than an apartment, but it will also come with more privacy. Prioritizing commutes and amenities that are essential to you is also recommended. Don’t forget to plan for the future as well, such as buying a larger home than currently necessary if you plan on growing your family.
No matter how exciting, buying your first home is also an incredibly stressful process. But with a reliable real estate agent and the helpful tips mentioned above, it’s bound to be successful.