Are you a first-time homebuyer looking for tips to help you in buying your dream home? Do you want to know the right steps to take to get the best value for your money? Do not stress out; below are the perfect tips for first-time homebuyers.
Start Saving Early for a Downpayment
Immediately you have conceived the idea of buying a home, start saving for the mandatory 20% downpayment. Except you have the money to complete the buying process without borrowing; you must start saving early. As a first-time homebuyer, related mortgage programs require 3-5% downpayment, which can be huge depending on the cost of the house you intend to purchase. To avoid having trouble with cash, start saving early.
Assess Downpayments and Sources of Funding
Go through different sources of funding available to raise the money you need to pay for your new home. Each mortgage option comes with its pros and cons. If you need to raise fund through a mortgage, consider one of the following:
- Federal Housing Administration Loan – requires 3.5% downpayment
- Veterans Affairs Loan – requires no downpayment because the Department of Veterans Affairs secures it.
- Conventional Mortgage – requires as low as 3% downpayment.
If you have critical illness insurance, getting a preferred mortgage comes with some technicalities. Your lender may not require your critical illness cover because it will be added as a rider to a mortgage life insurance policy. However, the lender may request to be named as the beneficiary of the critical illness insurance as an assurance that they would recover some parts of the loan in case the recipient falls ill and cannot survive.
Get Pre-approved for a Loan
Having chosen from the available sources of raising the money you need to buy your dream home, make savings for the closing costs too. After that, contact the mortgage company you have decided to raise fund from. Get pre-approved for a loan and obtain a letter attesting to your pre-approval status. A pre-approval letter shows that you are indeed serious about purchasing a home.
Find a Home and Inspect It
The next step is to search for homes placed on sale that are within your price range. You need an agent to help you with the procedure. Go ahead with the negotiation with your agent and proceed to home inspection. Before making a purchase after and seal the deal.
Prepare for Closing
As a first-time homebuyer, you should plan for closing the homebuying deal. Quite a lot of people make the mistake of not preparing for this closing process. It may take 43 days to complete the deal. This stage requires a series of documents to be signed and exchanged. As a result, you need the services of a legal team to interpret the content of the documents and assure you that everything is documented correctly. Bear in mind that you would be responsible for the legal fees and other expenses at the closing of the homebuying.
As an Independent Financial Advisor I take a true holistic approach when advising you and your family in Investment, Insurance, Mortgage. I will provide you with a financial road map, and help you execute the strategies identified in order to achieve your long-term goals and objectives.