Buying a House? Things You Should Know

Buying a home is a very complex task for anyone, especially if it's their first time. It involves a whole series of interrelated steps, starting with setting aside the money and closing the deal. Our brief advice is primarily aimed at those tackling this task for the first time. These tips include how to prepare for the purchase, how to choose a mortgage, and what to do when buying a home.

Set aside a basic amount

Depending on the type of mortgage you choose and the lender you borrow, the down payment can certainly vary. Consider that for first-time homebuyers with a good credit score, a down payment of around 3% may be sufficient. Of course, this small percentage can be difficult to secure if your dream home costs a lot of money. You also have to consider the fees you'll need to pay to finalize the mortgage, which can range from 2% to 5% of the loan amount. And then there are the costs of the initial renovation, moving, and possibly furniture, which must be paid in cash after you've purchased the home.

Determine what house you can reasonably afford

How much can you safely afford to invest in your first home? Set a price range based on your income, debt, down payment, credit score, and where you plan to live.

Check and strengthen your credit

Your credit score will determine whether you'll be eligible for a mortgage, and this will influence the interest rate lenders will charge you. You can still improve your credit score by obtaining free copies of your credit reports from the bureaus, paying your bills on time, and keeping your current credit cards active.

Choosing a mortgage

Regarding the different types of mortgages available, there are several types available, depending on the down payment percentage, eligibility requirements, and other options. Regarding the mortgage term, you can choose from a short term of about 15 years to a longer term of up to 30 years. Keep in mind that a 15-year mortgage typically has a lower interest rate than a 30-year mortgage, but the monthly payments are higher.

Choosing a good real estate agent

Hire a good real estate agent who can help you find a home that suits your needs and assist you in negotiations. It's best to use at least two qualified agents, whose experience will help first-time homebuyers.

Choose the right home for you

Consider the pros and cons of different housing types: While a condo may be more comfortable than a single-family home, you'll undoubtedly enjoy less privacy, in addition to shared expenses. In the case of a single-family home, which is priced lower than homes in good condition, you'll only need an additional budget for renovations, which you can finance with your mortgage. Consider your long-term needs and whether a starter or permanent residence is better. If you plan to start or expand your family, it may make sense to purchase a more spacious home or one with upgradeable rooms. Choose a home with daily utilities within walking distance.