Your Place Under the Sky: The Complete Guide to Buying Your First Home

Your Place Under the Sky: The Complete Guide to Buying Your First Home

The thought of buying a house for the first time is thrilling. First-time homeowners look forward to the freedom, the independence, and the security of having somewhere to call home. Buying a home for the first time is an experience like no other. Like many great things in life, there's always a downside.

Your place under the sky doesn't become yours before introducing you to a world of stress first. The typical first-time buyer needs to save around 30% of their annual income to have enough money to fund the move. The National Association of Realtors predicts the median price of houses to increase by 3 to 8% by the end of 2021, which doesn't help first-time buyers.

Although the process is financially demanding and time-consuming, buying a house for the first time is a step many Americans are itching to take. At the moment, houses for sale in Chesapeake VA are some of the most sought after on the market. If you're dreaming of your place under the sky, here's a complete guide to buying your first home.

Think Ahead

It's easy to get caught up in the moment and assume a house is affordable from the listing price. First-time homebuyers think that because the monthly mortgage and bill calculations seem OK, the home will be easy to afford. That's where the sneaky bills come into play. First-time buyers also need to consider contacting a home warranty company to secure cover for possessions in the home. Not to mention, the cost of filling the fridge each week, the cost of subscriptions, the cost of buying all the necessary appliances. The list could go on, but it might send a shiver down your spine.

It's no secret that moving out is an expensive game. First-time homebuyers should remember to account for all financial requirements, and considering Townsville house and land packages can help in budgeting for all necessary expenses. Prepare early and think ahead; it makes things far easier further down the line.

First-Time Buyer Perks

One thing many first-time buyers don't realize is that there are perks worth utilizing. There are state programs, loans from the federal government, and tax breaks. These are all things that first-time buyers should look to get their hands on. These perks are the government's ways of trying to help first-time buyers get on the property market. Especially those that feel they will struggle to pay the normal minimum down payment, which is 20% of the purchase price.

Predominantly, lenders want to see that your debt-to-income ratio is below 43%. There are multiple government-backed loan schemes for first-time buyers. Here are some you should take the time to explore:

  • Federal Housing Association loan
  • U.S. Department of Agriculture loan
  • Veterans Affairs loan
  • The Good Neighbour Next Door loan for the emergency services workers
  • Fannie Mae or Freddie Mac loans
  • Various state and local first-time buyer programs and grants

You're not totally on your own when buying a home. But it is important to note that all of these loans will still require your personal financial contribution.

The 'Are You Ready To Buy Checklist?'

If you feel like you're coming to a point in your life when you want to buy your own home, having a 'are you ready to buy checklist' can help. Although you may feel as though you can afford the price of a home, there's a bundle of costs that come with it. Below you will find the complete 'are you ready to buy checklist?'.

What's Your Credit Like?

One of the first things mortgage brokers look at is your credit score. Your credit score is essentially your creditworthiness. Therefore, lenders want to know that the money they're lending you will return to them.

Lenders judge that by looking at your credit score, which is measured using the FICO model. The exact formula for calculating an individual's credit score is top secret. However, we do know the following criteria is included when producing credit scores:

  • 35% is your payment history
  • 30% is your debt history
  • 15% is the time your credit history runs from
  • 10% is the type of credit you already have
  • 10% is due to any recent searches for credit on your file

It's wise to contact a financial advisor and mortgage advisor to discuss any financial changes you may need to make to improve your credit score before attempting to buy your first home.

Can You Afford It?

You can afford the downpayment, but can you afford everything else that comes with it? Complete a serious audit of your finances. This will help you decide whether the lust for wanting your own home is clouding your vision.

If you find yourself regularly in an overdraft or feel the need to use a credit card often, now might not be the right time to buy a home. Here's a list of additional bills you'll have to pay on top of what you're paying now. That should give you an idea of whether the additional cost is a burden you can carry.

  • Monthly mortgage payments
  • Water bill
  • Utilities (gas, electric, water, sewer, waste, and recycling)
  • Internet
  • Cable
  • Community bills if you buy in a gated community

Yard maintenance

According to research, 54% of Americans are living paycheck to paycheck. And, 21% are struggling to pay their bills. If this applies to you, consider taking another few years to secure an additional income and find your financial footing.

What Can You Afford?

You know you want to move out, and you know you have some savings, and feel like you're living comfortably, so what can you afford? Depending on your goals and current situation, consider buying a smaller home for the first time. This will help you test the homeowner's waters. Smaller houses have smaller monthly payments, smaller monthly utility bills, and are easier to maintain.

It's also far more realistic for a first-time, single buyer to have a smaller home. Moving out with a partner or a family cuts the financial burden in half. Which may mean you can afford more. A good rule to follow is the 28%/36% rule. This dictates you shouldn't spend more than 28% of your monthly income on household bills, and 36% on debt.

What's In Your Savings?

Ah, the all-important savings. The one thing people ask you when you tell them you're going to move out is, "how much did you have to save"? The goal for many first-time buyers is to save enough for the down payment.

The downpayment is generally 10% of the market price of the house. Typically, around $10,000 is needed to cover the down payment, mortgage broker and realtor fees, legal fees, first month bills, moving costs, and furniture and appliance costs. Depending on the price of the house you have in mind, this figure may be a lot higher.

Find A Great Realtor and Mortgage Broker

One way of making the process far easier is to find a great realtor. A great realtor will help you to navigate the choppy seas that are buying your first home. Realtors will help you negotiate confusing parts of the buying process, find properties in prime locations, and find ways of cutting costs for you. They also act as an advocate for you as a buyer. 91% of buyers chose to use a realtor and have a specific realtor they are loyal to and recommend to friends and family.

The Buying Process

The buying process is an intricate dance of back and forth conversations with realtors, homeowners, mortgage advisors, and lenders until you eventually find yourself settled in your home. Here are the steps you'll need to take:

Finance Options

There are various finance options available to you. Some lending options are above, but a financial advisor or mortgage broker may go over them in more detail with you. Consider the best finance option for you and explore the different federal-backed loans to see if you are eligible.

Finding A Home

Take the time to find the perfect home in the perfect location. Buying a home is a long-term commitment. It's important to learn about the new area you're moving to, what your neighbors are like, what the schools are like, and much more. Many first-time buyers rush to purchase their first home without considering some of the basics. The inventories of new Pinetop houses for sale are at an all-time high, and the Pinetop-Lakeside real estate market is the hottest it has ever been.

Making An Offer

Once you find the home of your dreams, it's time to watch all of your hard-earned money fly out of your bank account in one fell swoop. Negotiating is a key part of making an offer. Always offer just below the asking price. You'll find that many people are desperate to sell the house and compromise slightly on the price.

Have The Home Inspected

Many buyers prefer to have the home inspection before they put their money into it. Professionals can come and assess the safety and integrity of the house, which will highlight any flaws. Although it is an additional cost, it may save you money down the line.

Once you have had the home inspected and your offer is accepted, it's time to begin moving in. The stress won't end until you're completely moved in and sit on your sofa with a glass of wine, but that moment will be oh so perfect. Embrace the chaos of moving home for the first time, as it is an experience you'll never forget!

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