Today, buying your first home has many challenges. Skyrocketing home prices, competition with property investors, and rising inflation are just a few. Despite first-time homebuyers’ challenges in the current housing market, homeownership is still a goal for millions of people.
Kensington, MD, is an amazing community for young people. It’s also perfect for a family seeking a home.
To increase your chances of finding the right home at the right price, you’ll what to educate yourself on the home buying process. If you’re on the hunt for the perfect first home, check out our list of tips for first-time homebuyers.
1. Tips for First-time Homebuyers Include Homebuyer Programs
Everyone purchasing their first home should consider participating in a first-time homebuyer program. These programs are backed by HUD and administered via local governments and non-profits.
At the end of the program, participants with successful completion are eligible for down-payment assistance. In addition, you’ll learn valuable information like how to maintain a budget, buy the right home for your income level, and more.
2. Researching Real Estate Agents
First-time homebuyers usually have limited experience when it comes to buying a home. Contracting with a real estate agent gives you an ally in the home buying process.
Realtors know all of the ins and outs of buying a home. They have industry connections that can prove beneficial and provide cost savings.
Once the realtor knows what you’re looking for, they will comprise a list of available homes to show you.
3. Choosing a Lender
Choosing a lender when buying a home as a first-time homebuyer can have advantages and disadvantages. Establishing and maintaining a positive relationship with a financial institution increases your chances of approval.
Instances could arise where your approval can go either way. The banker doesn’t know you and must rely on outside sources to gauge your creditworthiness. Without that relationship, you’re starting from scratch.
4. Knowing How to Make an Offer
Making an offer requires strategic planning. You’ll need to understand current housing trends and the fair market value of houses in the areas you want to purchase a home.
Real estate agents in Kensington are the best sources for this information. Realtors are skilled in negotiations and will advise you on whether you’re making a sound offer. Your realtor will work with the seller’s realtor to negotiate any offers and counter-offers.
5. Setting Criteria
Setting criteria for buying a home is among smart tips for first-time homebuyers. Before starting your homebuying journey, make a list of everything you want in a home. Include square footage, number of bedrooms, bathrooms, lot size, and location.
A clear picture of your must-haves and things you don’t want gives the real estate agents in Kensington a starting point. They can save time by not showing you homes you’re not interested in viewing.
6. Understanding Your Credit Score
Your credit score plays a dominant role in qualifying for a mortgage. First-time homebuyer programs are instrumental in assisting home buyers in addressing credit disputes. They also provide useful tools to clean up your credit.
Credit scores determine how much home buyers will pay for the house. It impacts the interest rate you’ll receive, the type of mortgage you’ll qualify for, the price paid for homeowners’ insurance, and how much home you can buy.
Before starting the home buying process, receive a free copy of your credit report from all three major reporting agencies.
7. Steady Work History
Steady work history is beneficial when it comes to buying a home. Some lenders will emphasize how long you’ve worked for your current employer. Work history in the same industry can also be a factor considered by mortgage processors.
This isn’t to say you can’t buy a home if you’ve only been with your current employer for six months. However, changing jobs every six months can raise a red flag about your employment stability.
Once you decide to buy a home, it’s a good strategy to stay with your current employer until you close on your home. Resigning from a position in the middle of the home buying process can kill the deal.
8. Saving for a Down Payment and Closing Costs
A crucial part of buying a home is the down payment. Depending on the type of loan you get, the down payment can range between three and twenty percent. Although today, the average is around seven percent.
Down payments are a part of the upfront costs you’ll have to pay when buying a home. The down payment reduces the size of the mortgage and will directly impact your monthly mortgage payment.
Closing costs are fees in addition to the down payment. A rough estimate is three to five percent of the mortgage amount. Closing costs include:
- Appraisal and survey fee
- Homeowner insurance
- Loan origination fees
- Mortgage taxes
- Property taxes
- Title insurance
- and other miscellaneous costs
Plan and start saving for these costs. Don’t start your home buying journey by getting blindsided by these expenses.
9. Researching Mortgage Types
First-time homebuyers should become acquainted with the five different types of mortgages. Each has its requirements and appeals to different buyers.
- Adjustable-rate
- Conventional
- Fixed-rate
- Government-insured
- Jumbo
An essential tip for first-time homebuyers is to seek FHA loans backed by the federal government.
10. Hiring the Right Home Inspector
You want to ensure the home you purchase is in good condition and won’t incur costly repairs in the first five years. Hiring a home inspector will put trained eyes on the home before buying.
Vital aspects of home inspection reports are assessing the HVAC system, electrical, plumbing, and roofing.
It’s Time to Find Your Dream Home
Our ten tips for first-time homebuyers can help alleviate the stress of buying your first home.
If you’re looking for your first home or a forever home, Brett McCurdy is one of Kensington’s best real estate agents. He’s an expert in real estate and an expert realtor for the Maryland area. You deserve a good home at a competitive price, and Brett McCurdy can help ensure that you’ll receive it.