• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • HOME
  • RECOMMENDED BOOKS
  • FREE TOOLS
  • CONTACT US
  • ABOUT

The Fortunate Investor

Investing, Business & Personal Finance For Wealth Builders

  • Save Money
  • Invest Your Money
  • Get Out of Debt
  • Making Money Online
  • Family & Money
  • Taxes
  • Business
  • Retirement
    • Retirement Calculator
Home » 11 Must-Know Financial Tips for First Time Homeowners

11 Must-Know Financial Tips for First Time Homeowners

October 20, 2019 By Kevin | This article may contain affiliate links. For more information visit our Disclosure

Tweet
Share
Pin
Share
Share

11 Must-Know Financial Tips for First Time HomeownersBuying your first home? Congrats!

Purchasing a new house is an exciting time but it can also be overwhelming, especially if you’re a first-time buyer. It’s a huge financial commitment and the process can be confusing.

From selecting your mortgage to going through the escrow process, it’s best to know as much as possible before you begin the search. This way, you’re prepared once the process gets moving.

Read on to learn everything you need to know about buying a home for the first time.

Experiment with down Payment Options

If you’re planning to buy your first home, you’ve likely been saving up for your down payment. But do you know exactly how much you’ll need to save or that there are various down payment options available?

Most people plan to put down the standard 20%. But do a little more research before you commit to this type of down payment. Many lenders will allow you to put down less up front.

This can help you get the home you want, faster. A lower down payment will mean a higher mortgage rate and monthly payment but if that’s not a concern this may be a great option.

Some private lenders will let you put down 10%, 5% or even 3%.

Determine what’s right for you and what amount per month you feel comfortable paying before making your selection.

Research Various Types of Mortgages

When selecting your mortgage, you’ll want to compare rates from more than one lender. Whether you go through a bank or a private lending firm, each place will get you a slightly different deal.

Compare the down payment they’re asking for and what your interest will be. There are also different types of mortgages to consider.

For example, many people opt for a 30-year fixed mortgage. This means your interest rate is locked for the duration of the loan term and can not go up over time even when the government raises interest rates.

An adjustable-rate mortgage may get you an extremely low interest rate but be careful as they can change the rate on your during your time paying the loan as the name suggests.

You can also choose from a government-insured or conventional loan.

Learn more about the variety of mortgages and ask your lender to present you for options with each so you can compare and make the best selection.

Get Your Credit in Shape

credit report score

It’s simple, the better your credit, the better deal you’ll get on your loan. This is because the lender will see you as an ideal candidate to borrow and someone who pays back loans consistently and stays above board with everything they lease, rent or own.

Before you begin working with a lender, you should pay off any outstanding debt, pay down your credit card bills to lower your balance and pause any new items that could affect your score.

Meaning, don’t go lease a new car right before you want to secure a home loan. This will lower your credit.

Get Pre-Approved for a New House

Getting a pre-approval letter from your lender lets you know exactly how much you can afford, what your down payment will be and what your interest rate is.

Having this information is extremely helpful in helping you find the right home that makes sense for you and your budget. If you start house shopping before getting pre-approved, you may be looking at homes you don’t have a shot of getting.

Having a pre-approval letter also makes you competitive in today’s marketplace because it allows you to make an offer immediately.

When you see a home you like, you don’t have to call a lender to get that process started, you can simply make your offer because you know what you’re approved for.

Pick the Right Broker

Selecting the right real estate agent is a key factor in a successful home-buying experience.

Choose wisely. You want someone who is experienced in the industry and also in the neighborhood or area you want to buy in.

This way they can help you determine if a home you’re interested is worth the money, will grow in value or if there’s a new up and coming area close by that may be a better investment.

It’s also their job to treat you like a first time home buyer. They should carefully explain the process from the day you make the offer to closing.

They should walk you through how escrow works, important dates and deadlines along the way and how closing on a home will go.

You’ve never done this before so having someone who communicates well and takes their time to explain the process is very important.

Determine the Neighborhoods You’d Like to Live in

chaulk houseWhile it’s good to stay open to different areas around you, try to zero in on a few neighborhoods that are in your price-range and work for your lifestyle.

This will help you and your broker focus on these areas and be the first to know when something new goes on the market.

Consider walk-ability, commute, safety, school district and more when making your selection.

Figure out Your Non-Negotiables

Your first home will likely not be your dream home. Meaning, you’ll probably have to compromise or sacrifice something you wanted.

It’s important to make a list of your non-negotiables so you don’t waste time looking at homes that don’t fulfill this.

If you absolutely need 3 bedrooms and 2 bathrooms, that’s what you need and you shouldn’t look at a house with less.

Once you write this list, it will help you and your broker filter your search and find a home that meets all the required elements.

Set Your Budget and Stick to It

After you’ve been pre-approved you’ll have a very clear idea of what your limit.

This amount may be more than you wanted to spend, so don’t feel like you have to look at homes in that price range. Your letter just tells you what you could get.

Whatever your maximum budget is, be sure to look at homes at that price and below.

You may find a home priced lower and need to be competitive on your offer. Many homes in this market go for over asking and if you’re only looking at homes at your max budget, you can’t compete in the same way.

Go to Open Houses

renting open houseSee what’s out there! Spend your weekends going to open houses. You can go with your broker or on your own.

It’s good to get an idea of what homes are selling for, what they look like and their area. It’s also good to get a feel for how many other people are searching in the areas you like.

Are the open houses packed? This is likely a competitive market then. This is all about research, knowing what you like, what you don’t, and possibly finding the perfect home in the process.

Remember There Will Be Extra Costs

Many first-time home buyers are shocked to learn about the extra costs associated with buying a home.

While you can’t anticipate every little thing, there are some sure-fire expenses you’ll have to fork over.

It is your responsibility to pay for the inspections on a home you’re interested in purchasing. Depending on which inspections you select (sewer, general, mold, roof, chimney, etc.) you could pay anywhere from $500 – $2,000.

There are also escrow fees due at closing. These fees will vary based on the escrow company you’re working with but it’s usually about $2 for every $1,000 of the cost of the home.

You’ll also be required to purchase homeowners insurance before escrow closes and prove you have it along with paying property taxes.

These are all expenses outside the realm of the actual home and it’s purchase price so it’s important to set aside money for them.

Learn How to Escrow Process Works

While it’s your brokers’ job to walk you through the process, they’re likely also working on deals with many other clients and may not have the time to take you through every step and explain things to you thoroughly.

The best thing you can do is a little research to educate yourself on the process and its various steps. This way you know as much as a first time home buyer can and feel as prepared as possible along the way.

Get Started Today!

Now that you know all the steps to start the process of buying a new house, it’s time to start planning.

Be sure you do as much research as possible, select a terrific broker and lender, and take your time to find the house that’s right for you.

We’re here to help you save money, invest and get out of debt. Contact us today to see how we can work with you to fulfill your dreams and accomplish your goals.

  • About
  • Latest Posts
Kevin
Kevin has been a professional writer in personal finance and business topics for over 20 years.
Latest posts by Kevin (see all)
  • Startup Tips To Help You Get Started - January 22, 2021
  • Have You Thought About These Business Essentials? - January 19, 2021
  • Enhancing trading performance with three easy techniques - January 13, 2021

Primary Sidebar

Popular Articles

How to Avoid the 4 Biggest Business Risks

How to Avoid the 4 Biggest Business Risks

There are so many things that can go wrong when you run your own small business. You’re on a tight … Read More about How to Avoid the 4 Biggest Business Risks

Startup Tips To Help You Get Started

Startup Tips To Help You Get Started

Starting your own business can be daunting for any budding entrepreneur. It’s about having the … Read More about Startup Tips To Help You Get Started

What You Should Do If You Have An Accident At Work

What You Should Do If You Have An Accident At Work

Sustaining an injury can be a nightmare for many reasons, and it’s important that you know how to … Read More about What You Should Do If You Have An Accident At Work

Should You Save Or Get Credit Here’s The Answer

Should You Save Or Get Credit? Here’s The Answer

When it comes to your finances, you may find that you just don’t really know where to start with it. … Read More about Should You Save Or Get Credit? Here’s The Answer

6 Key Strategies To Enhance Success in Family-Owned Businesses

6 Key Strategies To Enhance Success in Family-Owned Businesses

Did you know that family-owned businesses generate most of the world's wealth? Take the United … Read More about 6 Key Strategies To Enhance Success in Family-Owned Businesses

Footer

TOPICS

SAVE MONEY
INVEST MONEY
REDUCE DEBT
MAKE MONEY
FAMILY & MONEY
TAXES
START A BUSINESS
RETIREMENT

THE FORTUNATE INVESTOR

ABOUT US
ADVERTISE
CONTACT US

The Fortunate Investor focuses on personal finance topics to build wealth. Topics include saving money, investing, managing debt, family and money, taxes, making money, college planning, starting a business, coupons and retirement.

SOCIAL MEDIA

FACEBOOK
TWITTER
PINTEREST
INSTAGRAM
YOUTUBE

Copyright © 2021 Fortunate Investor. All Rights Reserved. | Disclaimer & Disclosure | Privacy Policy | Terms of Service