If you’re a first-time home buyer, you’re likely very anxious and slightly confused by the whole housing market and all the processes involved with it. And while you probably know many people who have bought their own home, no home buying situation is ever the same. So while their tips and advice might be helpful in some instances, it’s going to be much more helpful for you to know general information about how to be a smart first-time home buyer. So to help you gain a little more knowledge about home buying, here are three ways you can be a smart first-time home buyer.
Understand The True Cost of Home Ownership
For many first-time home buyers, the only real cost they’re looking at is their mortgage. And while this will likely be the majority of what you’re spending your money on each month, there are quite a few other costs that you’ll have to pay as a home buyer. According to Amy Fontinelle, a contributor to Investopedia.com, these additional expenses include property taxes, insurance, maintenance and repairs, and potential HOA fees and private mortgage insurance. If you have only been weighing your budget based on the mortgage alone, you’ll soon find that you’ll be spending much more than you initially thought as a homeowner.
Discover Your Mortgage Options
While the most traditional way to set up a mortgage is with a 30-year loan, this is by no means the only mortgage option available to most home buyers. According to Emily Starbuck Crone, a contributor to NerdWallet.com, your flexibility with payments and your feelings about risk can all be variables in how you want to structure your home loan. If you can afford higher monthly payments, you may want to get a loan that’s only 15 or 20 years long. Additionally, if you’re willing to risk a potentially higher interest rate, you may choose to pick a loan with an adjustable-rate mortgage. Your lender will be able to help you find what’s the best option for you, as long as they know you’re interested in looking at other options.
Get Pre-Approved For Your Mortgage
In order to secure the home you want, you may consider getting pre-approved for your mortgage before you begin searching for your new home. According to Sarah Max, a contributor to Time Money, getting a pre-approval for your mortgage means your lender has already guaranteed that they’ll back you the money to purchase your home. If the seller is looking for a particularly seamless sale, this can be a huge perk for both them and you. Additionally, it can help you know exactly what price you can purchase a home at.
If you’ll be looking to purchase your first home soon, use the tips mentioned above to ensure you don’t make any of the classic first-time home buyer mistakes.