The Do's and Don'ts of Buying Your First Home

Owning a home opens up a world of opportunities, from the chance to make a profit to tax breaks and more.

If you're starting to consider buying your first home, there's a vast array of things to consider before you take the plunge.

Read on for a list of important do's and don'ts that every first-time home buyer should keep in mind.

Do: Check on Your Credit Health

Before you can get financed for a new home, you'll need to make sure that you have a decent credit score. If your score is low or you have late payments on your report, then your odds of being approved are lowered significantly.

Start by pulling a copy of your current credit report, and make sure you get a copy so you can look for errors. If you notice something's not right, now is the time to get it corrected.

Make sure that all of your current accounts are in good standing and that all of your bills are paid on time. The sooner you can work on improving your score, the easier the approval process will be.

This is also a great time to start reducing your debt. If you happen to have extra cash, try to pay some of your debts down if possible.

Don't: Forget About the Down Payment

When you're thinking about buying a house, it's important to remember that you'll need some money set aside for the down payment. The amount of money required will depend on several factors.

The asking price of the home, your credit standing, and the loan program you choose will all play a role in the minimum required amount. Now is the time to start saving for the down payment if you haven't done so already.

Down payment requirements vary by lender and loan program, so make sure you're clear about this before you start your search. Keep in mind that the larger your down payment is, the better your mortgage terms will be.

Sometimes, new home buyers forget that they'll likely need cash for a down payment, which can make or break a deal. Don't forget to include your down payment in the total cost of the home, including closing costs.

Do: Know What You Want When Buying Your First Home

It's easy to get caught up in the excitement of buying your first home, but that doesn't mean that you shouldn't take your time. Sit down and make a comprehensive list of the things that are most important to you.

Whether it's the location, style, or size of the home, it's crucial to have a firm understanding of what you want in a home. Narrow down your list and separate it into three categories: must-haves, things that are nice to have, and things you don't want.

Always consider the age of the home, the size, and how much outdoor space you want and need. Just like the old adage says, location is also a priority for most first-time homebuyers, too.

Go online and weed out your choices of available homes based on the criteria you write down. This will make it a lot easier when it's time to go looking at houses with your agent.

Don't: Be Too Picky

It's perfectly fine to say that you want a ranch rather than a two-story home. However, being too picky could end up backfiring, especially if you're looking for a new home when the market is hot.

Keep in mind that you can always change certain things you don't like about a home. If the paint color or flooring isn't exactly your style, you can always change these things later once you close.

Being too nitpicky can make it difficult to find a place to settle down. Refer back to your list of wants and needs, and use them as a guide when making your decision.

Walking away from a house just because you don't like the kitchen countertops can make your search more difficult. It's ok to compromise on the little things about a home as long as you keep the bigger picture in full view.

Do: Consult with a Realtor

You might think that you can buy a home on your own, but having a professional by your side will make the process easier. Your real estate agent can help you find the perfect house and they're also there to negotiate when the time comes.

An agent can be a terrific advocate if you need to do some negotiating with the seller. If there are repairs that need to be made, your agent can ask for a lower price, for example.

Not only are real estate agents great negotiators, but they also have a firm grip on your local market. They can find out about homes as soon as they go up for sale, and they can give insight as to which neighborhoods are best for your needs.

Never underestimate the value of having a professional agent by your side when you're looking for a home. Their job is to make sure that you're happy about the house and that the entire transaction goes smoothly.

Don't: Forget About Closing Costs

As a home buyer, you'll be expected to pony up some closing costs before you can get the keys to your new home. Your lender should be able to give you a rough estimate of these costs before you close.

Keep in mind that closing costs vary depending on the type of loan you get, the price of the house, and other factors. If you require a real estate attorney, that fee will also be added to your total.

You'll get the exact closing costs a few days before you actually close. In the meantime, make sure that you have the money ready and available in addition to your down payment.

On closing day, you'll be expected to provide the amount of your down payment plus the closing costs before the deal is sealed. Forgetting about these costs can cause you to lose out on your new home!

Do: Shop Around for the Best Rates

One of the most important home buying tips to remember is that you can shop around for rates. Research the lenders and loan programs that are available to you, and do a side-by-side comparison.

Most lenders provide a basic idea of their rates online. If you're not sure where to start, a mortgage broker can also be of great help. They'll do the shopping for you and ensure that you're getting the best deal.

Even something as small as one-half of a percentage point can make a big difference in your mortgage loan. The lower the rate, the smaller your monthly payments will be.

Remember, people with great credit tend to get the lowest rates and the best terms. That's why keeping up with your credit and knowing your score is so important.

Don't: Make Any Major Purchases Before You Close

It might be tempting to go out and celebrate with a big purchase before you close, like a new car or appliances. However, doing so can actually ruin the entire deal.

Either a few days before or the day of your closing, the lender will run your credit report again. If they notice any red flags, you could potentially lose out on the chance to buy the home.

Between the time you apply and the day of closing, avoid buying anything using your credit cards. This is often called the "quiet period," which is when you should be on your best behavior in terms of spending money.

Once you close and get the keys to your new home, feel free to have a great time buying new things for the house. Until then, it's best to avoid making any kind of major purchases, just so you can be sure there aren't any hiccups on closing day.

Do: Think About the Home's Resale Value

Most first-time homebuyers end up moving at some point in the future. When you make an offer on a home, think about its resale potential.

After you live in your new home for a period of time, you can sell it and hopefully make a profit. If the home is in bad shape or in an undesirable location, the resale value will be lower.

Resale value isn't the only thing you should consider when buying your first home. However, it's a smart way to make sure that you're getting the absolute most out of your investment later.

Get Excited About Your First Home

Keep these do's and don'ts in mind when buying your first home. Once you understand how to buy a home, you'll feel confident in the decision you make.

If you're ready to buy (or sell) a home, be sure to get in touch with one of our experienced agents and contact us today. 

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