Buying a home for the first time is one of the biggest decisions many people will make during their life. Here are our tips for the first-time home buyer.
Draw up a budget and stick with it
Budgeting is going to be especially important during the process. Before you prepare your budget, speak with a loan officer first. You are going to need to plan in advance how much you can afford to spend on your future home. Once you know how much you can afford, then you can also plan for all possible additional expenses such as utility bills, property taxes, and many more that could come up during the course of your home search.
Explore your down payment costs
It is common for home owners to plan for a 20% down payment. However, large down payments are not required for your first purchase. Interest rates are at historical lows, so buying with no money down is possible and can still result in an affordable payment. Some first-time home buyer programs allow for as little as a 3% down payment while Coastal’s first-time home buyer program offers no money down and no Private Mortgage insurance (PMI). An added bonus - the interest you pay on your loan is tax deductible too (PMI payments are no longer deductible under current rules).
Something else to consider too – once you’ve talked with a loan officer to determine how much you can afford (see Step 1 above), if you take advantage of Coastal’s first-time home buyer program, even with no money down, you have a greater chance of being able to live in a larger home for less money than if you were paying rent. It is possible!
Buy a home that fits your future plans
While it would be easy to only think about the current necessities you would need in a home, it is smart to think about the future as well. For example, if you are thinking about having kids, how will this home accommodate them - is it big enough? What kind of schools would they attend? Is the home you are considering in the type of community where you’d want to start a family? You’ll want to factor all of these questions into your decision when it is time to decide on a home.
Know that you’re going to have to compromise
It is highly unlikely that you will find your dream home that is right for you in every aspect. It is important to consider what you’re willing to compromise. Keep in mind there is always the option of renovating after you move in, but you would need to make sure that would work within your budget as well.
These are all tips we have found that have been extremely helpful for first time home buyers. Have you or any friends recently bought your first home and have advice for others? Please leave a comment below!