Buying a home for the first time is exciting and can be a great financial decision if handled carefully, but there are also common pitfalls first time homebuyers should be aware of. By starting your search early and focusing on the practical details, you can snag a great house without incurring financial risks. Here are three tips for first time homebuyers:
Get Officially Pre-Approved
Applying for a mortgage can be time-consuming, and it's smart to get a pre-approval under your belt before you begin looking at homes. Applying for pre-approval with a mortgage broker gives you a solid idea of the size of a loan you will qualify for, as well as the interest rate you can expect to pay.
This way, you can avoid looking for houses that are outside of the range that you are qualified for, instead honing in on those homes for sale that you are likely to be approved for when you fill out the official loan application. Pre-approval can also identify potential areas of concern, such as problems with your credit history, which you can then work on fixing before you buy a home.
Work with an Experienced Agent
Some first time homebuyers attempt to save a bit of money by bypassing a real estate agent, instead representing themselves in the bidding process. This is rarely a good idea, and can be especially risky for first time buyers. An experienced realtor knows how to navigate the buying process on your behalf in a way that protects you financially and legally, and also knows when it's appropriate to negotiate on a price and when it's best to offer the asking price or above.
A real estate agent will get you into a home sooner, with less risk, and often for less money than if you try to go at it alone.
Be Honest About Your Budget
Keep in mind that you don't need to buy a home at the top of the range you were pre-qualified for. Take a close look at your finances and decide how much mortgage you can afford, remembering to factor in homeowner's insurance as well as savings earmarked for repairs and maintenance. Buying the best home you can easily afford is a better idea than getting into a mortgage that is too large and will cause you financial distress.
By following these tips for first time homebuyers, you will more easily navigate the home buying process and increase your chances of ending up with the best home for your needs.