10 things every first-time homebuyer should know
While the homebuying process may seem overwhelming, it’s not an impossible feat. Although there has been a recent increase in […] The post 10 things every first-time homebuyer should know appeared first on TheGrio.
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While the homebuying process may seem overwhelming, it’s not an impossible feat.
Although there has been a recent increase in overall mortgage fairness, first-time homebuyers in the United States face unprecedented challenges in the current housing market.
Mortgage rates have reached a 23-year high, and historically disadvantaged groups — predominantly Black, Hispanic, and Native American communities — continue to experience racial discrimination.
Still, becoming a first-time homeowner might be a realistic objective for well-organized consumers who conduct due diligence. TheGrio, with help from Bankrate, has a few pointers to help consumers navigate their journey to a successful house purchase.
- Research the homebuying process
Prior to searching for the ideal house, it’s critical to comprehend the homebuying process. Determine what you need and want in a house; check out terminology and phrases related to buying a home; learn about mortgage rates; and assess whether you can imagine living in the property for years to come.
- Pull your credit report
For a first-time homebuyer, a higher credit score equals a better mortgage interest rate. Get free credit reports from Equifax, Experian, and TransUnion to thoroughly understand your credit situation.
Several factors – including credit card limits, overdraft protection levels, and the portion of credit you currently utilize – determine your credit score.
It’s crucial to ensure you pay all your bills on time to avoid setbacks, and use free services to monitor your credit report and remain up-to-date about what’s impacting your score.
- Determine your budget
In the case of a bidding war — not unheard of in the current market — you will have some leverage to exceed the asking price if you look for homes below your budget, according to Bankrate.
While creating your budget for the amount of housing you can afford, consider recurrent expenses you will have to pay once you purchase, such as utilities, insurance, property taxes, mortgage, and HOA fees.
Setting aside money regularly to cover maintenance and unforeseen repairs is also a good idea.
- Evaluate neighborhoods
Considering your wants and needs regarding your new house instead of your current one and scouting neighborhoods in advance will save you a lot of time. What kind of home are you trying to find? What features can you give up on? Which are absolute musts?
- Know your rights
As a first-time homebuyer, you have the freedom to select the mortgage lender, real estate agent, and home inspector of your choice. In addition, you have the right to be notified of any liens or other encumbrances on the title, obtain copies of any legal documents related to the purchase, and have them evaluated and clarified by a legal expert.
- Learn about homebuying programs
Several programs are available to first-time homebuyers, including HomePath Ready Buyer, Good Neighbor Next Door, and FHA home loans.
Finding out about loan programs, assembling required paperwork, and submitting loan applications on time can all help to improve your chances of getting financial assistance.
- Shop for mortgage lenders
Shop around and evaluate mortgage rates and loans from at least three to five different lenders, taking note of your interaction.
8. Get preapproval
Mortgage preapproval letters specify exactly how much lenders will loan you. To get them, you must provide proof of income and assets. Arranging paperwork ahead of time will ensure a seamless process and prepare potential homebuyers for mortgage underwriting, which will require similar documentation.
It’s important to find out from your lender how long the preapproval will last, as most expire after 90 days. For first-time homebuyers with significant debt or mediocre credit, it’s best to apply for preapproval as soon as possible, allowing time to address any problems.
9. Collaborate with a real estate agent
Interviewing and hiring an experienced real estate agent with extensive knowledge of the neighborhood you’re interested in will give you insight into the state of the market and whether the properties you want to make offers on are priced competitively. In addition, your agent may look out for you during price and term negotiations and point out possible issues in a house or community.
10. Prepare to close
After the seller has accepted your purchase offer and you have selected a loan and a lender, it’s time to proceed with settlement, also called closing.
Watch for requests and notifications because you’ll need to offer your lender more documentation. Additionally, you’ll need to shop for homeowner’s and title insurance and have your home inspected.
First-time homebuyers can benefit from building equity through larger down payments and refinancing to a shorter loan term, as well as tax benefits like mortgage interest, property tax, home office deductions, and home sale exclusion. They can also enjoy the freedom to upgrade and decorate their home as they please, knowing that, unlike rent, their fixed-rate mortgage payments won’t increase annually.
Although it may seem overwhelming initially, dividing the procedure into smaller steps and completing each individually can help you remain focused, stay on track and complete tasks to find your dream home.
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The post 10 things every first-time homebuyer should know appeared first on TheGrio.
