Buying a home for the first time can be a tedious task because of the complex processes that are involved. Also, conmen have taken advantage of the sophisticated processes to defraud potential buyers. One needs to be extra careful so as not to be caught up in surprise expenses and unnecessary fines. Home buying is one of the biggest purchases that people make in their lifetime. Any potential buyer should have a full understanding of the risks involved, and the proper steps to make. Here are some tips for first-time home buyers.
The first step in buying a home is ascertaining how much you are willing to spend in purchasing a home. One has to come up with a price range that they are willing to work with. This will guide them on what type of home to buy and which neighborhood they can live in. Affordability can be determined by the amount of savings one has and the mortgage that one is eligible for. Setting the price range helps one to work within their means without straining.
Pay a higher percentage of the down payment
There are some real estate companies that offer a very low amount of down payment when purchasing a home. This looks appealing to the buyer. However, a low percentage of the down payment means that one has to pay higher amounts of installment. The best approach when purchasing a house is to pay the bigger percentage of the total value as down payment to pay less monthly installments. This makes the payment process much easier.
Get professional advice
Different places have different tax regimes and laws that may affect any purchase that involves a lot of money. Some states have assistance programs that help the citizens understand the processes that are involved in the purchase of a property. Seeking assistance from legitimate professionals helps the buyer to avoid the pitfalls that conmen use to defraud potential buyers. One may also need professional advice on the best credit facility to use within their locality.
Compare the rates of the mortgages offered
One of the biggest mistakes that first-time home buyers make is to take a quotation from a single lender and work with it without comparing with others. Consumer financial protection bureau advises that one takes a quotation from at least three lenders. This will help you to do your calculations and settle on the best option that will fit your budget. Statistics show that comparison of mortgage rates can help one to save up to three thousand dollars within the first five years of their repayment period.
Most first-time home buyer’s budget for the mortgage and end up being frustrated by last-minute additional costs that can be of significant amounts. Depending on your locality, the closing costs can range from 2% to 5% of the total loan amount. This usually caters for title searches, inspection, and insurance. These amounts could be frustrating if you had not budgeted for them. One can negotiate with their agent to get discounts on these amounts before they take a mortgage.