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Buying your first property is among the biggest decisions you’ll make in a lifetime. And if you get your home at a good price with strong mortgage rates and terms, it can also become an investment that grows your money over time.
While buying a home is certainly an exciting time, there’s a lot at stake. Remember these tips to keep you focused and save you money as you go through the various stages of homebuying.
Before you start shopping around, work on getting your financial house in order. Saving for a down payment and paying off debt can put you in a stronger financial position when you start submitting loan applications. Lenders consider your level of debt and the size of your loan when determining your rate.
Focus on improving any blemishes a lender might look down upon, such as high credit card utilization or only making minimum payments. Avoid making large purchases and taking on new debt when you’re house hunting. Sometimes creditors make mistakes, so look for and dispute any errors with the credit bureau.
Your mortgage payment is made up of more than just the principal and interest. Consider other fees that you could pay, on top of your mortgage:
Speak with several lenders, comparing rates, fees and proposed closing costs. When you’ve found the right fit, work with your lender to obtain a preapproval letter, which can give you a leg up when making offers. But just because you’re approved for a certain amount doesn’t mean you should take it all. Take a hard look at your finances and only borrow what you can afford.
Think about your future, not just where you are in your life right now. Is there room for your family to grow if that’s in the plans? Is the neighborhood family-friendly? Are you in a growing area that’s likely to boost property values?
Once you’ve found “the one,” it’s time to make an offer with the help of your real estate agent. If the seller doesn’t accept your first offer, don’t be afraid to counter. If you can’t reach a deal you’re comfortable with or if you feel the seller is asking more than market value, move on.
Even if the house looks like it’s in pristine condition, you never know what could be lurking behind the walls or on the roof. A home inspection can reveal issues with the house, helping you negotiate or giving you good reason to walk away.
If you’re in love with a house but the inspection reveals a leaky roof and major HVAC issues, ask yourself if the high cost of repairs is affordable and worth it. Do the math, look to the future and realize that there’s always another house.
Start with positioning yourself for the strongest rates and terms you’re eligible for. Consider your current finances, including how much you’ll be able to put down.
Once you have a sense of a realistic budget for your home, consider the ways you can save more on your mortgage:
To get an idea as to how much you can borrow, enter your household’s income, the number of your dependents and any existing debts into our calculator.
The calculator estimates your expenses using a standard cost-of-living index, giving you a home cost you likely could afford.
If your lender doesn’t offer specific loans for first-time homebuyers, you may still be able to suss out an ideal mortgage by looking for:
Buying your first home is an exciting process, but positioning yourself for the strongest mortgage takes time and research. Read about your financing options and compare lenders to find the best rates and terms you’re eligible for.
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