5 Tips to Read Before Buying Your First Home

 

The steps you take before purchasing a property can determine your future finances and quality of life. Then, unfortunately, a few mistakes could drain your bank balance, satisfaction in the home and may stand in the way of your ultimate financial goals.

As you will want to pick the perfect property and protect your cash flow, you should check out these five tips to read before buying your first home.

1.   Set a Down Payment Goal

Every budding homeowner will need to place a down payment on a house. While the lender you choose will determine the minimum down payment amount, some may allow a mortgage applicant to make a 3% down payment if they have good credit.

However, even 3% can be a huge sum when investing in property. Bear in mind the down payment amount can determine your monthly mortgage repayments. The higher your down payment amount, the smaller the monthly sum. Consider the type of property you would like to own, then find a balance between a down payment sum that matches your current finances and desired monthly mortgage repayment.

2.   Improve Your Credit Score

A mortgage lender will not only require a down payment on a property, but they will only accept applications from people who have a good credit score. Also, your credit history can affect the interest rate they will offer, which will affect your future finances.

If you need to improve your credit score, you must:

·         Pay all bills on schedule

·         Lower your credit card balances

·         Don’t close current credit cards to protect your score

·         Dispute any errors on your credit report

3.   Don’t Overlook Extra Costs

Budding homeowners are often eager to save for a down payment and can forget about other costs, such as home insurance payments, moving fees, home inspections, property taxes, and closing costs.

It is crucial to factor the above costs into your budget to prevent unwanted financial problems when finalizing a mortgage. Plus, you can protect your finances by researching the market for the best options for your bank balance. For example, if you’re looking for competitively priced, flexible coverage for protecting your belongings, request a custom Virginia homeowner’s insurance quote.

4.   Choose the Right Property for You

You should weigh up the pros and cons of a property before submitting an offer. For example, a townhouse is often a more affordable option than a detached family home in the same neighborhood, but the shared walls may result in less privacy.

Also, you may need to choose between a readymade property or a fixer upper. Remember, while a fixer-upper might be cheaper, it may require substantial time and investment once you move in and may feature hidden problems.

5.   Compare Mortgage Lenders

It is a wise idea to request various loan estimates from many lenders for a similar mortgage type. Then, be sure to compare the costs and interest rates to make an informed choice. Also, consider if a lender allows property buyers to purchase discount points, which enables them to pay a fee upfront to slash their interest rate.