Buying your first home can be one of the most rewarding yet stressful experiences of your life. There are several factors that come into play when starting the search. It is paramount to have your affairs in order before moving alone in the process.
Let's start with the most important factor first: Your finances. If you don’t have a very colorful credit score, you may want to way a little while before you’re thinking of purchasing a home. With a score below 750 and especially 700, you may not get a very intriguing rate with your mortgage. Take time to build your credit if it isn’t already established and then start the process after that.
Okay, now you have your credit ready for the big game. At this point, it is ideal (not necessary) to have at least 10% down payment on hand—meaning 10% of the value of the home, in cash. With FHA, VA and USDA loans becoming increasingly popular, lower down payments have been a highly utilized strategy. However, with these low down payments come a high interest rates. Ideally, if you have over 10% down payment you will get a fairly decent interest rate for your mortgage. Today's market is still hot from 2022, and the more competitive offers are coming out on top.
Words of the wise: Save as much money as you can for hidden costs. Taxes, insurance, repairs and other miscellaneous expenses can rip an unexpected and gaping hole in your wallet. Make a plan to save a certain percentage of your monthly savings to “miscellaneous home expenses.” Most home investors or those who have purchased multiple homes before, know exactly this. Expenses with a new home can add up, quickly. Be prepared!
Now, the fun begins. Once you have your money lined up and have a financial plan of attack, it’s time to see what you can feasibly get pre-approved for mortgage-wise. Explore various options and not just the most popular choices at your local bank. Ask around. Ask your Realtor or family and friends what they’ve used in the past. Realtors will be your absolute best friend through this process!
At this stage in the game, you know where you are financially and what you can feasibly afford for you and your family. Now, what location do you want to live in? Do you have kids? Look around for the right school district for you. Maybe you want to live close to work. Determine good locations and research, research, research. What is the history of property values in these areas? What about property taxes? Do your homework and wokr with your Realtor to ensure your questions are being answered (and that you're asking the right ones).
Now, it's time to shine: Make an offer. The key here is to start low. Think about it like you're at an auction and you're bidding on an item. You don't want to be the highest bidder off the bat. Don’t start off your home search with a grueling and never-ending bidding war. Stay rational with your offer and stay focused. Practical discussions and reasoning will prevail in negotiating price with the other party. Don’t offer $400,000 for a house worth well over $600,000. You won’t end up with the house. You’ll just end up annoying the other party and losing to a high bid.
While there are dozens of other important tips to begin the thrilling home purchasing process, we think these will get you off on the right track. Contact us today to learn more on how to begin your incredible journey!Posted by Andree Huffine, Sarasota Realtor on