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7 Tips For A First Time Homebuyer

Published on: Feb 08, 2016  02:53:04

The most expensive purchase you'll ever make will be a home. Buying property allows you to build wealth through equity accumulation and tax write-offs. However, the process of buying your first home is often an intimidating one. You may not know what to expect as you meet with your real estate agent, but there are a few tips to keep in mind as you slowly narrow down your property choices.

1. Get Pre-Approved

You may have an idea of the type of home that you prefer, but you need to understand your financial limits as you shop too. Ideally, get pre-approved for a home loan at your bank before attending an open house. You'll know how much you can afford as you look at various properties.

2. Avoid Major Purchases

Don't apply for a home loan and subsequently finance a brand-new car the next day. Your finances should remain steady until your mortgage is approved. If you spread your finances too thin, home loan lenders might decline your application as a result.

3. Ask for an Escrow Account

Lenders will quote you a monthly payment that only include the principal and interest. Ask for an escrow account that's added to your monthly payment. This account is for property tax and insurance costs. When you pay a small amount into the escrow each month, you pay down the expensive biyearly bills you'd receive otherwise.

4. Be Aware of Down Payment Requirements

In the past, down payments could be as low as $1,000. In today's financial climate, you'll need about 20 percent of the home's value as a down payment. Discuss your options with your real estate agent. There might be programs that help you afford this down-payment amount.

5. Attend Every Home Inspection

Before you purchase any property, it must be inspected by an independent contractor. Be present during these inspections, so that you can participate in the process. If you have a concern about a major household system, you can ease your mind with a professional discussion with the contractor.

6. Back Away From a Problematic Property

You're not obligated to purchase or maintain a property until all of the final papers are signed. If an inspection turns up a lot of problems, don't be afraid to back away from the property. There are many other homes that you can tour and purchase.

7. Understand That Negotiating is Normal

Your dream home might be too expensive, but you can try negotiating with the seller. Negotiating between parties is normal in the real-estate world. The seller may want a rapid sale so dropping the price a few thousand dollars is worth the money. 

If you want to be sure that the papers you're signing are fair and legitimate, you can always consult with a real estate attorney. These professionals can break down the legal terminology and explain every detail of the property purchase. With everything clear in your mind, you can complete your property purchase and reap the benefits in the future.