First Time Home Buyers – The first time Home Buyer’s Guide
Can’t wait to have your first home? It's not easy to be a first time buyer because you need to look out for rent, saving for a deposit and coping up with rising house prices all at the same time. It's going to be rough, if you want to know how to buy a house, don't worry we prepared some tips for you on how to buy your first home.
First Time Home Buyer Programs
Costs and fees associated with buying a home are getting bigger since this is a business. There are several home buying guides for a first time home buyer; it doesn't mean need a lot of money to spend. There are national, local, and state programs available for a first time home buyer. Many of these first time home buyers grant can be a help to cover a large amount of the payment, usually we call it closing costs, and then it will allow them to shoulder a bigger percentage of the loan or even all of it.
First time buyer home loans
Loans for first time home buyers is always important, believe it or not, It's a big deal for first time buyers First-time buyers sometimes recover from financial responsibilities so most of them benefit from borrower-friendly loan features.
First time home buyer credit
Although we have first time home buyer incentives, but what is a First time home buyer credit? You might be able to take the first-time homebuyer credit if you were an eligible buyer who purchased a home as your main/primary residence in 2008, 2009 or 2010. Eligibility varies depends on the year of your purchase. And there are specific benefits that each certain member of the military and certain other federal employees have, such as an additional year to buy a home, if they are otherwise qualified for the credit.
Advice for First time home buyers/tips for first time home buyers
There are several things you need to determine, and those are your long-term goals and figuring out how home ownership blends in with those plans. Some people simply want to hold all of their rent payments and get involved in programmes such as first time home buyer mortgages that actually give them something more easily. Other people see home ownership as a symbol of their independence and they like to be the landlord of the place their living. To make your home ownership mindset much clear, here are some questions for you:
1. What type of home is suitable for your needs?
You have some options when buying a residential property: a traditional single-family home, a townhouse, a duplex, a condo, or a multi-family building with two to four units. Each choice has its own pros and cons, but it depends on your homeownership goals, so you need to choose wisely which type of property will help you reach those goals.
2. What are the specific features for your ideal home?
This is preferably suits for first time home buyer requirements, It's perfectly good to retain some ideas in this list, because you're actually making the biggest purchase of your life, and you must ensure that what you purchase will fit both your needs and wants. Your list should include basic and simple desires, like a good neighbourhood, until you reach the small details like bathroom design and a kitchen that comes with complete appliances
3. How much mortgage are you qualified for?
Before you start going on shopping, it's important to have an idea of how much will a lender be willing to lend you to purchase your first home. You may think you can afford a £500,000 home, but most lenders might think you're only good for £300,000 depending on aspects like how much other debt you have, how long you've been at your current job and of course your monthly income. In short, most realtors will not spend time with clients who haven't stated well how much they can afford to spend.
Make sure to your loans gets pre-approved, before placing an offer on a home: In a lot of instances, sellers will never entertain an offer that’s not followed with a pre-approval mortgage. You do this by applying for a mortgage and following the necessary paperwork. After a lender checks all of the financial information provided (verifying employment information, checking credit scores, etc.), then the lender can give a pre-approval to the borrower for a certain amount. You need to be aware that even if your mortgage has been pre-approved, there is a tendency that your loan can fail at the last minute if you do something to interrupt credit score.
4. How much can you actually afford for your ideal home?
For first time home buyer down payments on the other hand, sometimes a bank would give you a loan for more than you what you really want to pay for the house. Just because the bank will lend you £400,000 doesn’t mean you will borrow that big. Many first-time homebuyers make this mistake and end up not meeting the desires they wanted, it means after they are finished with their monthly mortgage payment they have no funds left for other payments, such as clothing, bills, gadgets, entertainment or even food.
Just like when you want to buy a family car, you'll want to look at the total cost of the house, not just the monthly payments for the mortgage. The monthly payment is also important, along with how much you can afford for the down payment, how expensive is the property taxes in your selected neighbourhood, how much homeowners’ insurance will it cost, how much you estimate the budget to maintain or improve the house.
If you're interested in purchasing a flat, keep in mind you'll have to pay the maintenance costs every month because you're part of a homeowner's association, which collects hundreds of dollars a month from the owners of each specific unit in the building in the form of fees. Also, Co-op owners pay monthly maintenance fees, but these are partially tax-deductible.
5. Do you have serious savings?
Even though you qualify for a big mortgage, there will be some considerations in the upfront costs (example: the down payment on the home, usually 20% or 10% of the total purchase price) and closing costs too. So you need to be careful with your money. When it comes to investing toward purchasing a home, one of the biggest challenges is keeping savings easy to be reached, a relatively safe vehicle that can still afford a return. If you have one year to three years to know your goal than a certificate of deposit may be a good option. It can't make you rich, but you're not going to lose money anyway. The same idea can be implemented to purchasing a short-term bond or fixed income file/portfolio that will give you some progress but also protect you from the emotional nature of the stock markets.
If the purchase of home happens in six months to a year, then you might want to keep the money liquidated. A high-yield savings account might be the best option.
The Buying Process/ Buying a house
Now that you've decided to get involve in buying a home, let's go further what you will be expecting from the home buying process itself. This is a hectic time with offers and counter-offers flying so fast, but if you are prepared for the hassle (and of course the paperwork), you can pass through the process with less intact. Here is the basic progression you can expect for home buyers:
1. Find a home
For a first time home owner, make sure to take advantage in all of the available options for searching homes on the market that includes using your real estate agent, searching for lists online and driving around the city or neighbourhoods that find your interest in search of for-sale signs. Also keep in touch out there with your friends, family, and business contacts. You might never know where a good reference or idea on the best home might come from.
Once you're already serious in shopping for a home, don't walk straight into an open house without having an agent assisting you(or being prepared to spell out the name of someone you're supposed to be working with). You can actually see how it may not work in your own interest to start dealing with a seller's agent before contacting one of your own.
If you're good with your budget, look for homes whose full potential is still up to date. Even though you can't afford to cover up the displeasing design in the bathroom now, it might be worth it to cope up and live with the ugliness for just temporary in exchange for getting the house you can afford.
Otherwise, if the home doesn't meet your needs in terms of the big things that are impossible or difficult to change, such as the location, neighbourhood and size, don't let those physical imperfections turn make you feel bad. A big help for first time home buyers is that you need to look for a house in which they can add value to, as this assures a big bump in equity to help them climb up the property ladder.
2. Secure financing and consider your financing options
First-time home-owner have a wide variety of options to help them get into a home, both those available to any buyer, through equity loan and those geared especially to new people. Many programs first-time home buyer offer minimum down payments as low as 3% to 5% (against the standard 20%), and some don't require down payment at all.
Don’t get stuck by loyalty to your current financial institution when it comes to seeking a pre-approval or searching for a mortgage: Try to explore and shop around, even if you only qualify for one type of loan. Fees can be surprisingly varied, same goes to mortgage interest rates, which of course has a big impact on the total amount you pay for your home.
Some authorities will also recommend you to have a backup lender. trying to be qualified for a loan isn’t a guarantee that your loan will eventually be funded: Underwriting guidelines shift, lender risk-analysis changes, and investor markets can change at some point. There might be some cases of clients signing loan and escrow documents, and then they're being updated 24 to 48 hours before the closing out that the lender froze the funding on their loan program. Having a second lender that already qualified you for a mortgage gives you a good alternate way to keep the process ongoing, or close to schedule.
3. Make an offer
Your real estate agent will be the one to help you decide how much is the amount you want to offer for the house along with any other conditions you want to ask for. Then your agent will present the offer to the seller's agent; it's either the seller will accept your offer or they will issue a counter-offer. You can then choose to accept or continue to go back around until you either reach a good deal or decide to call it quits.
Before passing your offer, take another close look at your budget. This time categorize in estimated closing costs, commuting costs and any immediate repairs and important appliances that you may need before you can move in. And think in advance: It is easy to be surprised by higher or unexpected utility costs in your new better and larger home. You might even request the energy bills from the past months to get an idea of the average monthly cost.
If you reach an agreement, you'll be able to make a good deposit and the process then transitions into escrow. Escrow is usually a short period of time (often about 30 days) wherein the seller removes the house from the market with the expectation that you will purchase the house — provided you don't find any serious problems or contradictions with it when you inspect it.
4. Acquire a home inspection
Even if the home that you planned to purchase appears to be perfect or let's say flawless! There’s no replacement for having a trained professional to inspect the property for the safety, quality and overall condition of your newly bought home. You don't want to get stuck with a pit of money or with the headache of fixing several of unexpected repairs. If the home inspector reveals serious problems or defects that the seller did not disclose, you'll generally be able to rescind your offer and claim your deposit back. Negotiating to have the seller to answer the repairs or provide a discount to the selling price are also other options to be considered.
5. Move on or close
If you're able to work out a deal with the seller, and if the inspection didn't reveal any significant problems, you are now ready to close. Closing basically involves signing a lot of documents, and I mean a lot of it in a very short time period, well you don't expect that they will just give it to you immediately while waiting that nothing falls through at the last minute.
There are things that you'll be dealing with and paying for in the final process of your purchase that may include having the home appraised (mortgage companies will require this to protect their interest in the house), doing a small title search to make sure that there is no one other than the seller holds a claim to the property, obtaining private mortgage insurance if your down payment is less than 20%, and completing mortgage paperwork. Other closing costs might include loan origination fees, title insurance, taxes, surveys and credit report charges.
Congratulations you have a new home! Wait, what's next?
You've signed the documents; the new house is starting to feel like home. But it doesn't end there. Home ownership costs extend beyond down payments and monthly mortgage payments. Let’s now discuss some final tips to make life as a new homeowner more fun and secure.
1. Save money
With home ownership comes important unexpected expenses, like buying a new fridge, windows are broken and needs to be replaced or the roof has a leak so it needs a new one. Start to practice in saving money for your emergency fund that you will be using for your home So that you won't be vulnerable to damages when these costs surprisingly arise.
2. Do some daily maintenance
With the big amount of money, you're supporting to your home, you'll want to make sure to provide the excellent care of it. daily maintenance can decrease your repair costs by assuring problems to be fixed when they are still small and manageable.
3. Don't mind the housing market
It doesn't matter what your home is worth at any given time except when the time comes that you will sell it. Being able to decide when you sell your home, instead of being forced to sell it due to job relocation or financial problems, it will determine whether you will see a fine and solid profit from your investment.
4. Never rely on killing your home to fund your retirement
Even though you own a home already, you should still continue to save the maximum of it in your retirement savings accounts each and every year. Although it may seem difficult to believe for anyone who has witnessed the fortunes that some people made during the housing bubble, you won't necessarily make a killing when you sell your house. If you want to make your home as a source of wealth in retirement, consider that once you've paid off your all your mortgages, the money that you were spending on monthly payments can be useful to fund some of your living and medical expenses when you undergo retirement.
How about if you have a bad credit?
For first time home buyers with bad credit, purchasing a home is actually considered a good investment. According to real estate experts, the housing market is currently favourable to buyers, with prices and also interest rates remaining low.
However, today, a bad credit history can even be a difficult obstacle for potential buyers than it was in the past, as the recent economic crisis forced to made lenders to tighten their standards for loaning money and providing mortgages to buyers.
However, it is not impossible. You can buy your first home with bad credit by local and federal resources and save for a larger down payment. Don’t worry; We prepared some helpful house buying tips for you.
1. Search for federal mortgage programs
The Federal Housing Administration (FHA) and the Veteran's Administration (VA) provide loans that have more forgiving standards of credit to qualify for loans. Work out with a lender that specializes in FHA and VA loans if you are qualified.
2. Search for homes
The first step in buying a home is to find a different choice of homes that you're interested in, based on their location, size, condition, etc. Contact some realtors in your area and tell them about your situation. Use an or agency to do real estate searches in your area.
-If you have filed bankruptcy already, learn how to buy a home after filing bankruptcy.
-If you have no money to pay down, visit how to buy a home with no money down.
-If you want to lease, visit a site on how to buy a house using a lease.
3. Take advantage of low down payments
The Federal Housing Administration (FHA) offers loans with very low down payments to first time home buyer, it also provides first time home buyer tips, Whereas a typical down payment, may be 20% of the loan, an FHA loan can be as low as 3.5% of the loan. If you're lack on cash, FHA loans are a very good choice especially if you have less than perfect credit.
4. Save money for a sizable down payment
Most normal loans require a down payment of 10 to 20 percent of the settled price. Having a risky credit profile means that down payments on loans you are eligible for will tend to be less favorable than if you had good credit. produce with as much cash as possible for a down payment , people who have saved diligently are more catchy to lenders.
5. Expect to pay a larger interest rate
There's no other way around it, getting a loan for a mortgage will usually be more expensive if you have a bad credit. A bad credit history shows that you're a person that can be risky to lend to. Because the bank or lender will think you can't repay what he will lend to you, it will be mandatory for you to pay more each month than a less-risky person.