Leaving home for the first time, or deciding to upgrade from an apartment complex can prove to be quite daunting on its own. When it comes to purchasing your first-time home, like any big project you are gearing up to complete, a home buying experience you want to be successful all comes down to getting the details right from start to finish. Continue to read below to find 12 tips for first-time homebuyers that can aid in navigating through the process.

1. Start Saving Ahead of Time12 Tips for First-Time Homebuyers

There are a few main costs to consider when trying to save for a home:

A downpayment all tends to depend upon the type of mortgage you choose and the lender. There are conventional loans aimed at first-time buyers with a credit score that falls under excellent, which allows for as little as 3% down.

Unfortunately, even a small downpayment can prove to be challenging to save. To paint the picture, even a 3% downpayment on a $300,000 home is $9,000. There are useful tools such as the downpayment calculator that may help in deciding upon a personal goal and looking into setting up an automatic transfer from checking to savings to get started.

Closing Costs:
Closing costs are both the fees and expenses paid to finalize your mortgage, typically ranging from 2%-5% of the loan amount. To maximize savings, the option of asking the seller to pay a portion of the closing costs is always on the table, for example, home inspections.

Move-in Expenses:
After the big house purchase, you are sure to need some cash. It would be smart to set aside for immediate home repairs, furnishings, and upgrades.

2. How Much Home Can You Afford?

Before you go investing in anything, make sure to sit down and draw up a sheet on how much you can safely spend on a house. There are great tools such as the home affordability calculator that will take your total income, rate of debt, downpayment, credit score, and the location of where you plan to live all into consideration to set a healthy price range.

3. Keep an Eye on Your Credit Score

A credit score is the determining factor of your qualification for a mortgage and may affect the interest rate lenders will offer. Below, read some steps to consider strengthening your credit score to qualify for buying a house:

  1. Free copies of your credit reports. You can retain free copies of your credit reports, and dispute any errors that could aid in hurting your score, and therefore your chances of buying a house.
  2. Paying bills on time. Paying your bills on time is a way to keep your credit card balances as low as possible.
  3. Keep credit cards open. Keeping all of your current credit cards open instead of closing a card will ensure that the portion of available credit you use is not increased, which can lower your score, something you don’t want to see.
  4. Tracking your credit score. There are many options when it comes to tracking your credit score. You can use apps such as NerdWallet, or you can keep track through your banking app on your smartphone.


4. Tips on Selecting the Right Mortgage

There are always a variety of mortgages available with varying downpayment options, as well as eligibility requirements. Below are the main categories to check out:

Conventional Mortgages
These types of mortgages are not guaranteed by the government. The plus side to these mortgages is that they target first-time home buyers, offering as little as 3% down.

FHA Loans 
These are loans that are insured by the Federal Housing Administration, allowing for a downpayment of as little as 3.5%.

USDA Loans
These loans are guaranteed by the US Department of Agriculture. These are typically for rural home buyers, usually requiring no downpayment. 

VA Loans 
These loans are guaranteed by the Department of Veterans Affairs. These loans are for both current and veteran military service members, usually requiring no downpayment.

5. Look into First-Time Home Buyer Assistance Programs

There are many states in the US and countries that offer first-time buyer programs, oftentimes combining low-interest-rate mortgages with assistance in a downpayment, as well as closing cost assistance. First-time home buyer programs also offer tax credits.

6. Compare your Mortgage Rates and Fees

You should look into requesting a loan estimate for the same type of mortgage from multiple lenders to compare costs. This will help you in comparing interest rates and the possibility of origination fees. The chance of getting discount points comes from an offer from lenders. These are fees that the borrower pays upfront to lower the interest rate. If you have the money on hand, then using buying points can make sense, if you plan on staying in the home for a long period. To ensure this is a good choice for you, use a discount points calculator.

7. Look into Getting a Preapproval Letter

To sum up, a preapproval letter thinks of it as a lender’s offer to loan you a certain approved amount under specific terms. Having this letter in your possession may show your seriousness as a buyer to home sellers and real estate agents, giving you an edge over home shoppers who haven’t done this yet. When you are ready to start shopping for a home, apply for a preapproval. To get qualified, a lender will pull your credit, and review documents to verify your income, assets, and potential debts.

8. Home Shopping Tips: Choosing a Real Estate Agent

A real estate agent will pick out the homes that meet your needs in the market, guiding you through the negotiation and closing process. It may help to get some agent referrals from previous homebuyers or check out reviews after you do your research. Feel free to interview a few agents, and request references, after all, they are working for you. Make sure to inquire about an agent’s experience, how they work in helping first-time homebuyers, and how they plan on helping you find a home.

9. Picking the Right House and the Right Neighborhood

When you are walking through each home, weigh the pros and cons that involve your lifestyle and budget. A townhouse may prove to be more affordable than a single-family home, but the con of that is that shared walls mean less privacy. There are always budgets for the homeowners association when it comes to shopping for condos and townhomes, or houses belonging to gated communities.

Another fun option, especially for those DIYers, is investing in a fixer-upper. These types of homes usually sell for less per square foot than homes that come move-in ready. But the con with this option is your willingness to budget extra for repairs and remodeling. There are renovation mortgages that finance both the home price and the cost of improvements in one loan. If you are planning on starting or extending your family, then it only makes sense to buy a home with room to grow. This leads us to the next phase: checking out potential neighborhoods thoroughly.

Testing the commute from important destinations such as work and school aids in the decision when looking for a neighborhood with amenities.

10. Sticking to Your Budget

The offer of a loan by a lender that is more than what is comfortably affordable, or feeling pressure to spend outside of your budget is never a good sign. To avoid financial stressors, set a price range to your budget, and stick with it. If meeting with a realtor, check out properties that hit below your price range to give you wiggle room if you have to bid in the competitive market.

11. Home Purchasing Tips: Paying for a Home Inspection

For a thorough assessment of the structure and mechanical systems of your home, consider a home inspection. These professional inspectors will look into any potential problems to ensure that your decision about buying the property is an informed one. Below are always some things to keep in mind:

The Inspection
Understand what is included in a home inspection. Standard inspections, unfortunately, don’t test for dangers such as radon, mold, or pests.

Where to Inspect
Every part of the house should be inspected, even the parts that you may never go into. Ensure that the inspector can get to every part of your house, especially the roof and the crawl space(s).

Attend the Inspection
Traditionally, you should be present when the inspection takes place. By following the inspector, you may get a better understanding of the home, and always make sure to ask questions on the spot. If you are busy and cannot attend the inspection, thoroughly review the inspector’s report and ask any questions about things that aren’t clear.

12. Buy Good Home Insurance

Before closing the deal on a house, your lender may require you to buy homeowner’s insurance. Home insurance covers the cost of repair, or may aid in replacing your personal belongings and home should they be damaged in an incident if it is covered by the policy.

This can also provide liability insurance should you be responsible for an injury or accident. Consider buying enough home insurance to cover the cost of disastrous events, such as having to rebuild the home should it be destroyed beyond repair.

For more information on tips and tricks for buying a home in Panama City Beach, Contact Our Office

More Great Advice for Buyers:

What Buyers Should Know About Squatters Rights

What to Know About Home Additions

5 Things to Know About Buying a Condo in Panama City Beach

Should I Buy an Interior or Exterior Condo?

Do You Really Need a Home Inspection?