Things to Know for First-Time Home Buyers

Buying a home can be a challenging experience for the first-time homebuyer. After all, you need to know several steps, tasks, and requirements before you buy a home. It is already a very expensive investment, and it is one of the most important milestones you can reach in life.

With the right guidance, becoming a first-time homebuyer is an achievable goal. Like any big project, a successful home buying experience is all about getting the right details from the start. Our guide can help you get a good start in your home buying process.

We've broken down the tips for the different stages of buying a home, from preparing to buy a home to shopping for your new place. Let's begin.

Tips for First-Time Home Buyers Preparing to Buy a Home

Start saving early

Buying a home is one of the most important (and most expensive) investments you can make. We suggest saving as much as possible for it and as early as you can start. Even if you will not be paying the entire cost upfront, buying a home has many costs involved.

Two of the main costs to consider when saving to buy a home are the down payment and closing costs. The down payment can be as little as 3% of the entire cost of the home if you have an excellent credit score. Closing costs consist of the fees and other expenses you pay when you finalize your mortgage.

Another major cost you need to consider when you are saving up to buy a new home is for the moving costs. There may be costs associated with making repairs, upgrades, and furnishings you need to consider.

Determine how much you can afford

Before you can start shopping around for homes, you need to know how much you can safely afford to spend. You should consider your home-buying budget based on your income, debt level, down payment, credit score, and where you plan to live.

Improve your credit score

Your credit score determines whether you can qualify for a mortgage, and it can make a difference in the interest rates you can get from lenders for your mortgage. You can get free copies of your credit reports from Experian, TransUnion, and Equifax. Get copies from all three and dispute any errors in your credit score to bring it up.

Make sure that you keep your credit card balances as low as possible and pay all your bills on time. Additionally, you should keep your current credit cards open because closing a card can lower your score since it increases the portion of available credit you use.

Tips for First-Time Home Buyers to Select Mortgage

Explore various mortgage options

Many first-time buyers do not know this, but there are several types of mortgages you can explore besides conventional mortgages. The government does not guarantee conventional mortgages, but you can get some exceptional conventional loans for as low as a 3% down payment as a first-time homebuyer.

FHA loans are insured by the Federal Housing Authority and allow down payments as low as 3.5%.

USDA loans are guaranteed by the US Department of Agriculture. These are loans designed for homebuyers in rural areas and typically require zero down payment.

VA loans are guaranteed by the Department of Veteran Affairs. These loans also typically do not require down payment. VA loans are designed for current and veteran military service members and their families.

You can also explore several options for mortgage terms. Most homebuyers go for 30-year terms with fixed mortgage rates. However, you can get a wide range of loan terms from your lender.

Look for first-time homebuyer assistance programs

Several states, cities, and counties offer first-time homebuyer programs that combine low-interest-rate mortgages with down payment assistance and closing cost assistance. Some first-time homebuyer programs even provide tax credits.

Compare mortgage rates and fees

Never go for the first lender you consider for your mortgage loan. We recommend requesting loan estimates for the same type of loan from several lenders. Compare the costs, interest rates, and any possible origination fees. It can help you get a good deal for your new home.

Tips for First-Time Home Buyers Shopping for a Home

Pick the right type of house and neighborhood

It is crucial to pick the right home in a neighborhood that can suit both your budget and your lifestyle. Choosing to buy a home that is affordable but in a neighborhood that you cannot like can turn out bad. Additionally, it would be best if you choose a neighborhood where you can afford to buy the home comfortably without putting financial stress on your family and yourself.

Stick to your budget

Some lenders can offer you loans that are higher than what you calculated as an affordable loan. It is also possible that you might feel tempted to spend outside your comfort zone to beat someone else’s offer on a home you want to buy. We recommend setting a price range based on your budget and sticking to it. Having a clear idea on how much you can spend will help you avoid undue financial stress in the future.

Pick the right real estate agent

An excellent real estate agent will listen to you carefully to understand your needs and scour the market for homes that are perfect for you. We recommend grilling your real estate agent with as many questions as you can until you are satisfied with their ability to help you find your new home. A pro tip is to stick with real estate agents who are already experienced with first-time homebuyers in the local real estate market.

Looking to Buy a Home in Redding, CA?

The Richard Nance Real Estate Team is here to help you realize your real estate dreams by finding you the perfect home to buy in Redding, CA. Our local real estate experts can pair you with the ideal home that matches your budget and fulfills all your requirements.

With our team at the helm, you can relax knowing that you have the best in the business looking after your home buying needs. We have extensive experience working with first-time home buyers, successfully helping them achieve this significant milestone in a smooth and streamlined experience.