First-Time Homebuyer Tips 2022
As a first-time homebuyer there are several unknown and uncertain areas you may encounter. Some of those areas can be scary if you are not prepared or do not know what to expect. I have a few tips and tools that may help you as a first time home buyer.
Let’s take a look into the necessary steps to properly prepare you for homeownership before you begin touring homes. I highly recommend you look at your personal finances and your credit score as the first step. Evaluate your monthly expenses, your savings accounts, and any upcoming expenses you might have. People often forget to budget for student loans or deferred payment loans when they calculate their anticipated monthly expenses; however, it is a good idea to consider those loans before purchasing a home. Once you have an idea of your finances, reach out to a mortgage lender to begin the pre-qualification process. Having a pre-qualification letter from your lender will make your offer that much stronger once you find the perfect home!
Aside from the principal amount of your mortgage there are other finances to consider. Currently the talk is about the interest rates increasing, while they are higher than they were this time last year, remember you will always pay some kind of interest. Wouldn’t it be better to pay the current interest rate instead of continuing to rent at 100% interest? Maybe you want to work on improving your credit score to qualify for a better interest rate. There are several ways to improve your credit score. Also, you could possibly be responsible for closing costs and a downpayment. Be sure to check out next week’s post about how to financially prepare to purchase a home. I will talk about how to cope with the current interest rates, preparing for your down payments, estimated closing costs, building good credit, and different financing programs.
At this point in the game you have already been on Zillow and Realtor.com “liking” and “saving” your favorite listings. It might be tempting to reach out to those listing agents and schedule a showing, but don’t! The agents you see online are the listing agents; therefore, they represent the sellers’ interest and not your interest. You should research local real estate agents in your area, and select a Realtor (or agent) that will represent your best interest during the homebuying process. We are lucky here in Tallahassee, Florida to have a wonderful Board of Realtors serving North Florida, where you can research and interview at least three possible agents before selecting the perfect match. How much should you budget to hire a Realtor? As the homebuyer, you do not have to pay your agent! Yes, you read that correctly, the sellers pay real estate commissions. Isn’t that awesome?
This one will be tempting, but never waive your right to an inspection or an appraisal! Oftentimes, especially in the current real estate market, buyers will waive their inspection or appraisal contingencies in hopes of winning in a multiple offer scenario. A home inspection and appraisal will protect your investment. Earlier this year, there were buyers purchasing homes far over asking price, those homes would then appraise lower than the purchase price. This is important for you as a potential buyer to know and understand how this will impact your equity in the home you are purchasing.
Inspections can be scary, expect an inspection report to come back containing several pages and with findings. Inspectors are hired to find all issues (or potential issues) with homes. Even brand new construction homes can have findings! Review your inspection report carefully, note what is flagged as a “major concern” and do not be scared when you receive your inspection report back!
I hope you feel that you now have all the necessary tools to purchase your first home! It is an exciting journey to homeownership. Join me next week to talk more about financially preparing to purchase a home!