Seasoned Tips for First-Time Home Buyers
Buying a home for the first time can fill you with a rush of emotions, from excitement to anxiety, wondering if everything will go smoothly. The first time home buying process here in Charlotte doesn't have to be complicated, especially if you find a great Realtor® to help guide you. For those of you in the initial stages of real estate, then chances are you’re simply wondering if your ideal home is out there.
While you may have apprehension about the buying process that is to come, this shouldn’t push you to shy away from the joys of owning your own home. Every home buyer, especially those purchasing for the first time, go through the same emotions that you’re experiencing. Most come out of it with keys in hand and anticipation of what the future holds, making the distress worth it.
As an experienced agent, I understand the fear and hesitance that my clients may have. This is why I put a significant emphasis on education so they can learn what it takes to buy a home. If you’re looking to get started with this process, then I’ve put together some of the most useful tips in this guide.
By applying what I am about to teach you, you’ll have a more realistic view of what it’s like to be prepared to purchase a home.
Understand What Your Credit Score Means
If you’re like most people, you can’t afford to purchase a home outright with cash from savings. This is when it will be time to seek out a mortgage from lenders such as banks and credit unions. Although this may sound intimidating, it’s much easier to navigate when you understand the complexities and challenges that may arise. For example, did you know that once you find the right lender, it will be easier to understand what your different options are? However, in order to find out what you’re eligible for, lenders will begin by looking at your credit score.
With your credit score being such a crucial part of obtaining a mortgage, you need to understand more about what goes into it and what may affect it. Let’s begin by taking a look at your actual credit score is. While it’s important to know this number, do you know that multiple purchases or financial decisions can affect it negatively? This is why - once you get pre-approved for a mortgage, you have to be careful not to knock your score down. If you were to do so, this could result in being denied the home that you love.
Now that you know the importance of maintaining a good credit score, what should you do if you discover your score isn’t quite where you need it to be? In a situation like this, don’t stress yourself out. Credit scores, no matter how damaged they are, can always be repaired. A good credit score is regularly above the 700 point mark. If you're below that you can still boost your score before you buy a home. However, this does take time, discipline with finances, and smart planning. By your willpower, you can put yourself in an excellent position to buy a home shortly (once your score is up to par).
After you’ve finally accomplished the goal of owning your first home, you cannot be negligent of your credit. Just one missed mortgage payment can negatively affect your score by more points than you may think.
Unfortunately, this is likely to increase interest rates, including your mortgage, your vehicles and even credit cards. For all of these reasons, it’s crucial to monitor your credit score and make healthy financial decisions that add to it rather than take away from it.
Get Pre-Approved for a Mortgage
Although the excitement of house hunting may have you ready to visit every open house you can find, you should first take a more in-depth look at what you can spend. After all, do you want to fall in love with a home you cannot afford? I recommend beginning your journey by speaking with a mortgage broker or mortgage lender.
They will run your personal and financial information to determine how much money you can get for a home loan. One of the most important tips I can share is that you should never go with the first option you’re given; you should always compare and shop around to see which lender will provide you with the best mortgage for your needs.
If it’s your first time working with a mortgage broker, you will likely find that their focus is on finding you a mortgage that will cost you less over time, even if it means that the interest rate is slightly higher than others.
Once you’ve found the right mortgage type and know what you need to qualify, you’ll be in a much better position to begin home shopping. Knowing the price range, you’ll be approved for will also help while searching so you don’t look at properties that are far outside of your budget.
Create a Financial Plan
Even if you’re aware of your finances and know-how to budget, owning a home for the first time may be more expensive than you think. This is because once you’re the owner, you become responsible for things the landlord once took care of for you. This means fixing a broken water heater, tending to the landscape, taking care of plumbing issues, and even making necessary repairs inside or outside of the home. By having an emergency fund available, you will save yourself the headache of figuring out how to pay for these costs as they arise.
Don’t forget that you’ll also need to have enough funds available to pay your mortgage and the down payment, so having a financial plan is essential, and having a plan for your mortgage will help you stick to your pan. If you plan ahead of time, you’ll be fiscally responsible, which is what I recommend to be a successful homeowner.
Find a Hard Working REALTOR®
It’s common for most home buyers to begin shopping by looking through listings online and driving around their favorite neighborhoods. While this is exciting at first, it can quickly become overwhelming with all the choices that are available on the market. This is when I recommend bringing a highly qualified real estate agent on board to help you out. Beyond their assistance with buying a home and sifting through the real estate market, they will help you learn more about the process to avoid some of the most common and costly mistakes that first time home buyers make.
If you’re thinking about hiring the REALTOR® you find, let me first warn you that this could result in disaster. While it would be great to think that every professional in this field is here to help, some may just want your money. Be sure to hire an agent who has the experience, a proven track record, and the knowledge necessary to get you into a home with realistic expectations. Someone who wants to help you achieve your real estate goals rather than their own financial gains.
It’s also imperative to know that banks prefer to lend on properties where a REALTOR® handled the transaction. Banks are being more careful these days, making sure that the likeliness of possible mortgage fraud is reduced and eliminated. If you were to hand a deal to the bank for approval that you have purchased on your own, chances are really high that it will be red-flagged. Having a real estate agent involved reassures the banks that it’s a legitimate transaction, and banks are more relaxed lending to clients who are using a real estate agent. In order to buy your first home, you'll want to have a focused search.
Create a Focused Search
Have you thought about what you want in a home? While you might have an idea of the number of bedrooms you would like, this is not sufficient enough to narrow down the selection. With so many homes out there to search, you must dig deeper to determine what’s ideal for your needs.
Some of the most important things to think about include amenities, size, location, school zone, outdoor space, etc. Don’t forget to factor in your future, such as raising children or taking on space-consuming projects, for which you may need extra room. A lot of first-time buyers opt to take part in the new construction home buying process, which can be a roller coaster ride if you're not working with a Realtor®!
As you write down your list, take some extra time to divide it into “wants” and “necessities.” For example, you may want a playroom but absolutely have to have three bedrooms. Ultimately you will likely have to sacrifice one thing over another to get what you want because no home is going to have it all. Fortunately, if you know what you really must have, you will increase your odds of finding the home of your dreams.
Final Thoughts on How to Buy a Home for The First Time
There are so many things first time home buyers need to know, that it's worth researching local programs and benefits offered for the first time buyer. If you have any questions around what may or may not be available in your area the first folks you should connect with are Realtors® and mortgage lenders. For the folks living here in Charlotte, we have so many great first time home buyer programs that it's worth connecting with us assist you in your home buying journey. We are happy to help any way we can.
Hi there! My name is Ryan Fitzgerald, and I am a REALTOR in Charlotte, NC. My goal is to help you learn more about real estate through our Charlotte Real Estate Blog! Hopefully, you enjoyed the above blog post and it found a way to provide help or value to you. When you're ready to buy or sell a home of your own let us know here. Please feel free to join the conversation by dropping us a comment below... We love comments!