Tips for First Time Home Buyers

first-time-home-buyers-150x150The new year is still young and many people have not lived up to their resolutions yet. Are you one of those Americans whose resolution is to buy a house this year? Well, depending on how the market is, it could be the right or wrong decision. However, if you read up on basic knowledge and go in as an  informed buyer, you’ll be able to get the best home deal. Read on to learn about the benefits of having your own home and questions to ask yourself before buying a home.

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Benefits of Having Your Own Home

You might be very nervous or anxious about owning your own home in the near future. While nervousness is normal, you can make yourself feel more prepared and ready to embark on your home buying journey by acquainting yourself with some of the potential benefits of having your own home.

  • Pride. Just imagine the satisfaction you’ll feel walking around your own home. When you are finally able to enjoy your own home, it will make you feel better about all of the expensive monthly payments you’ll be making for a long time. You can paint it the way you feel and make the home your own.
  • Appreciation in value. Even though the value of property keeps fluctuating sometimes, it is advantageous to have your own home because it generally rises. This has been established from the values of homes provided by the Office of Federal Housing Enterprise Oversight. This is an important tool against economic downturns like inflation.
  • Privacy. If you are used to renting a home or apartment life, you may be used less privacy, dealing with noisy neighbors, and property managers. Owning your own home will allow you to have significantly more privacy as well as security with alarm systems, deterrents and extra locks.
  • Tax incentives. Our taxation system encourages every person to have their own home. If you have taken out a mortgage loan to purchase a home then you can claim mortgage interest and property tax deductions as you file your tax returns at the end of each year. This is a double advantage: pay less and claim ownership.

Golden Tips for First Time Home Buyers

Buying a home is a long term to lifetime investment that requires serious dedication on your part.  Here are some tips that will make you decision savvy as you look forward to becoming a homeowner.

  1. Which type of home suits your needs? Imagine your family in a home- what kind of home is it? This will guide you a long way in deciding which type of home you need: a condo, townhouse, single-family home or multi-family home. Selecting the type of home you need in advance will help you save time in you search for the perfect house.
  2. Where is the home located? A home may have everything you need but the location could be unappealing. Do you love a reserved area in the outskirts of the city or do you love staying close to town? What about the neighborhood? The location and the surrounding environment should be critical factors you need to consider.
  3. Which features do you want in a home? Money can buy a house but not a home. And to build a happy home, you need to check for the features you want. These may include the size and nature of the house and neighborhood, layout, number of bedrooms, roof type and general aesthetics.
  4. What is the average market price of such a home? Establishing the average selling price for a home in your area is very important. The local listings for your area and an online search will help you to know the price beforehand. The market price value will help you to avoid paying too much for a home you could have owned for a lower price.
  5. How much can you afford? Check the average market interest rate and the individual rates charged by various lenders. Using a mortgage calculator, determine the cost of the home and compare it to what you can afford with all of your income sources that you intend to commit to the mortgage. Fannie Mae has recommended that a home shouldn’t cost you more than 28% of your overall income. Once it exceeds this value, you may not meet other household expenses.
  6. How much are closing costs? The price of the home (excluding the closing costs) may appear ideal. That’s why you need to inquire about the overall closing costs so that you make an informed decision after knowing the real total of the house. Closing costs may comprise of settlement fees, lender’s fees, title fees and homeowner association fees.
  7. Who will guide you through the purchase? If you aren’t a real estate guru then you may consider hiring the services of a real estate agent or mortgage broker to assist you in finding the right home. They will also help you with all the paperwork from the lender to the lawyer.
  8.  Bargain on the price offer. The US market is friendly and you can always bargain on the price offer quoted by the seller. You will often have the best luck bargaining on the price in the first three months of a new year when the market is still dormant. During these times you will enjoy some fringe benefits.
  9. Weigh the financing options available. A first time buyer has a wide range of financing options, ranging from loans backed by Freddie Mac and Fannie Mae to loans which don’t require you to meet the minimum standard down payment of 20% of the value of the home. Use a mortgage calculator to determine the monthly repayment and determine the impact that each option would have on your financial peace.
  10. Look at the bigger financial picture. While owning a house gives you a title of prestige and pride, keeping up with your home ownership can be expensive and labor-intensive. Remember you will not have a landlord to turn to when costs for roof repairs, new appliances and utility connection issues arise. You should be very sure that you will be able to manage these expenses to avoid breaking the bank.

These tips may not exhaust all that you need to know before becoming a homeowner. Overall, the more you know about what you expect as a potential homeowner, the more you avoid disillusionment and regret. This is the key to being a successful homeowner.