A house is probably the biggest purchase you will ever make, and buying your first home can be stressful and confusing. There’s a lot to consider, but there are many things you can do to make the process run more smoothly.
First Home Wish List
A wish list that describes everything you want in your new house can act as an ongoing guide — it’s an excellent thing to come back to as you look at properties and receive well-meaning advice from various sources. Work out what it is that you want from your first house, and write it down so you can come back to it regularly.
Some things to consider:
- Where do you want to live: close to the city, in the suburbs or in the country? (Think about how far you will need to travel to work and consider the cost of that travel when you’re working out what your household budget might be; a cheaper house further away may end up costing you more in the long run.)
- What type of house: apartment, house, townhouse?
- How many rooms and bedrooms will you need?
- Would you like a garden? If so, how big a garden?
- Do you want a new house or one that you can renovate or extend?
- How close do you need to be to shops, public transport, schools, hospitals, childcare, parks, beaches etc?
- How much are you willing to pay?
Aim to buy the best house you can afford. To work out how much you can afford, approach your bank to see how much they can lend you. Also see what deals a mortgage broker might be able to get you, so you can compare your options.
When you’re working out your budget, make sure you take into account property taxes and other fees, and consider the different interest rate options. A fixed interest rate may seem higher initially, but a variable interest rate comes with more risk.
When’s a good time to buy?
As a general rule, it’s usually a good time to buy when it’s a bad time to sell. If it’s a buyers’ market, you’ll be in a better position to bargain.
Looking at houses
- Visit any house you’re considering buying several times, and at different times of the day. You want to get a good sense of what it might be like to live there.
- What the neighbors are like? Do they seem friendly? Noisy?
- What’s the temperature and light like in the house at different times of the day?
- Is there any traffic noise? Is there any noise from nearby public transport?
- Are there any renovations that need doing, or any fittings or carpet that need replacing? Most importantly: does the building have any structural problems?
- If you have kids check the nearest schools
Take the time to make sure you’re not paying more than market value. Look at how much properties in the area are worth and compare that to what’s being asked.
A property boom in the area you’re buying might mean there’s not a lot of money to be made on the property for at least the next seven years, which is not necessarily a problem if you’re wanting to stay in the house for a while. Make sure you keep in mind how well the property will accommodate any changes in your life over that time.
Things to Remember When Buying Your First Home
The process of purchasing your first home can be both exciting and overwhelming, but keeping a few things in mind will help ensure that you make the right decisions and purchase the right home for you.
If you remember these four things, you are sure to purchase a home that you can be proud of and comfortable in for many years to come.
Buy a Home You Can Afford
It might seem simple, but a lot of people borrow as much as the bank will allow them to when purchasing a home. Just because a bank thinks you can afford something doesn’t necessarily mean that you can.
So make sure that you sit down and take an honest and good look at your financial situation; this can help you get into a home that is right for you and that won’t put you into a financial bind.
Consider Additional Expenses
You shouldn’t just look at the cost of a house when determining what you can and cannot afford; it is also important to look at other associated expenses, such as upkeep and maintenance.
For example, will you have to find and pay for extra space storage? Are the taxes higher than in other nearby locations? Thinking about these things can help you set a budget that you can stick to without feeling too much pain in your wallet.
Hire the Right Real Estate Agent
Hiring the right real estate agent can make the difference between a good buying experience and a horrible one. Look for someone who is knowledgeable about the housing market in your area and who is willing to work with you and your needs without trying to push you into a home that you don’t like or can’t afford.
It can be easy to fall in love with a home as soon as you walk through the door, but this can cause you to make a lot of poor decisions. Even though it isn’t easy, try to remain level-headed so that you will make the right choice, and take the time to sleep on the idea for a couple of nights before signing any paperwork.
These four tips seem simple, but they can really make the difference between ending up with the perfect home and ending up with a house that just isn’t right for you or your financial situation. If you follow them, you are sure to end up in the perfect first home.
Rent to Own Homes: A Good Option For First Time Buyers
For many Americans, buying a house seems like a dream that may never be achieved. Without adequate savings for a down payment or poor credit, home ownership can be difficult to attain via traditional means.
Often, renters feel as if their monthly payments are going toward providing a better life for their landlord, and not as an investment for themselves.
Lease to own homes can be a beacon of hope in these situations. Combatting the two big obstacles that wishful homebuyers struggle with the most, credit history and lack of savings, rent to own homes allow tenants to start applying some of their monthly payments toward the cost of the house they live in. At the end of a specified term, they then take over the property themselves. Let’s take a look at some of the benefits of this strategy.
Save Automatically, And Obtain Your Dream House Sooner
When renting to own, a contract is put into place that dictates all terms of the transaction. The rental payments will be somewhat higher, but a certain percentage of those monies will be put directly toward the price of the house. This means that the money you pay anyway will be automatically saved and invested in your future home.
The price of the property is agreed upon up front so that as the contract goes on, the renter (soon to be the owner) is already gaining equity. Using this strategy, start-up costs are minimal in comparison to buying a home outright. The buyer pays the landlord an option deposit plus the first month’s rental payment, and the contract is in place.
The option deposit goes 100% toward your down payment, and money from your monthly payments is applied directly as well. This results in a significant increase in the time it takes to pay off the debt, as typical standard mortgage payments are comprised of principal plus interest.
If anything happens and the buyer wants to get out of the contract, the landlord keeps the option deposit. No credit check is necessary, as approval is solely based on the landlord’s discretion.
Rent To Own Homes Are Less Risky For The Buyer
The contract will protect both the buyer and the landlord. All of the terms are clearly laid out, including the sale price, how much the monthly payments will be during the contract, what percentage of rent goes toward the down payment, and who is responsible for utility payments.
If any major maintenance issues come up, the landlord is still usually responsible for the repair, or the buyer can walk away from the deal. In addition, the landlord continues paying property taxes, since they are still the owner of the property.
Being able to get started with so little on a lease to own property means that the buying power is significantly increased. Each monthly rental payment can be viewed as an investment, and you’ll feel the pride of ownership even before the contract has completed.
In most cases, there is no additional down payment needed at the end of the contract, and your credit history has had a chance to improve, making financing much faster and easier. If you educate yourself on the process and agree on a fair price for the home, rent to own homes can help you obtain your dream faster.
How to Apply for Your First Mortgage
One of the biggest investments that you will ever make in your life is purchasing your home. Most people that purchase a home will spend decades paying it off, which makes it very important that you purchase the right home and at the right price.
When you do decide to purchase a home and are looking for houses for sale in Jacksonville, NC, there are several things that you should do when looking to apply for your mortgage.
Pull Your Credit
When looking to apply for a mortgage, the first thing that you will need to do is pull your credit ahead of time. One of the most important factors that banks will take into consideration when deciding whether to approve your loan is to review your credit report.
Your credit report will give a bank insight as to what other debt you have outstanding and how well you manage your finances. Pulling your credit report and score is important because it will give you an opportunity to find negatives in your report and fix the problem areas before you apply for the loan. Doing this will greatly increase your chances of being approved for a loan and receiving an affordable interest rate.
When you are looking to apply for a loan the second thing that you need to do is gather all of your financial data and paperwork prior to starting the application process.
When applying for a loan, you will need to provide a ton of personal information including old tax returns, pay stubs, bank statements, and other pieces of identification and personal finance verification.
Since it can take a long time gathering all of this information, it would be a good idea to start as soon as you can. This will ensure that you are prepared and do not delay the application process.
When applying for a new mortgage loan, another thing you need to do is to ensure that everything you submit and fill out is accurate. You will probably spend several hours filling out the applications, which can be exhausting. While it may seem like a better option to rush through everything, this could cause you to make mistakes.
The loan underwriting team will ultimately catch even small errors. This could cause you to make changes and end up cause a significant delay in receiving the loan. In an environment where interest rates are rising, this could cost you a lot of money.
Mistakes Often Made by Many First-Time Home Buyers
Getting your first mortgage is an education in and of itself, and many new homeowners make a few mistakes along the way. Unfortunately, some of these mistakes can lead to a foreclosure, and you may face lasting damage to your credit score, resulting in the ruin of your dreams of homeownership.
Learning about these potential mistakes beforehand can help you avoid the debt trap and ensure that your dreams of home ownership are realized.
Getting Too Much House
It’s all too tempting when the bank approves you for a nice big loan and you can get the house of your dreams and worry about making the payments later. This trap was a big reason the housing crisis occurred.
Just because you are approved for a certain amount doesn’t mean that you have to hit that limit. It is much better to get less house and have more room in your budget. Remember, you can always upgrade when your finances are more secure and you have more equity in your home. Starter homes may need a lot of work and they may be a little small, but it’s better to start small and end big than start too big and end up in foreclosure.
Overspending and Overextending
Another common problem first-time homeowners face is the issue of overextending and overspending. You’ve got a new house and you want to fill it with new furniture and make improvements to it.
This means opening up store credit cards, maxing out your current cards and ending up with a lot more debt than you planned. In time, you’ll end up struggling just to meet the minimum payments.
Self-control and will power are vital tools for a first time homebuyer. Don’t get carried away and make the mistake of thinking you’ll get caught up later.
In the real world, things happen. Jobs aren’t permanent and great health is never a guarantee. Avoid placing yourself in a position to lose everything, just because you wanted a few more things for your house.
Getting a Mortgage Modification
If you’ve already made some of these mistakes, don’t despair — there is a way to get out of it without losing your home. Most banks are more than willing to do a mortgage modification that will help you keep your house and get caught up on your payments.
Loan modifications can be used to help spread out what you owe over a long period of time, refinance your current mortgage to a lower rate, or even move some of your current payments to the back end of your loan.
In addition to a mortgage modification, you may also want to consider getting a debt consolidation loan to help you pay off your credit cards and lower your monthly expenses.
In order to get a mortgage modification, you will need to explain your current situation to your bank and discuss how you would like to modify your mortgage and what your options are.
The bank will need to see your current income statements and any other documents you can provide to back up your situation such as medical bills or proof that you’ve lost your job. Be completely honest and make sure that you can uphold the new loan agreement before you accept the loan modification.