Advice For First Time Home Buyers

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Advice for First Time Home Buyers

Buying your first home is very exciting, but it can also be very stressful. The cost of housing has been at an all-time high and real estate moves quickly. Of course certain areas are hotter than others, for example, Nashville houses for sale are considered some of the most desirable in the country. Prepare yourself to buy your first home in ‘Music City’ or anywhere else by following the advice below.

Set Yourself Up Financially

Before you even consider purchasing your first home, prepare yourself financially for what lies ahead. Dave Ramsey, financial guru, recommends paying off all debt and creating an emergency fund before purchasing a home. Maintenance of your new home can be expensive, especially if an unexpected repair needs to be made. 

Determine Your Budget

Financial professionals recommend that your housing costs be no more than 30% of your income. There are many things to consider, for example, how much do you have saved for a down payment? Will you have a 15- or 30-year fixed mortgage? You must also include HOA fees, insurance, and taxes. Do not let the bank or mortgage company decide how much you can afford. Even if you are approved for a $200,000 loan, a loan of $150,000 may fit better within your monthly budget. If this is your first home, it’s probably a starter home. Of course, you want to love it, but it doesn’t have to be absolutely perfect.

Save for Closing Costs

It’s common knowledge that you must save for a down payment on a home, and ideally 20%, but what’s often missed is that you also need to save for the closing costs.  Closing costs can range anywhere from 2% to 7% of the home value. Be sure to speak with your lender about this, so that you’re prepared in advance for the expense.

Get Pre-Approved

Before you start shopping, get pre-approved by a lender.  If you make an offer on a house without pre-approval, oftentimes, it won’t even be considered by the seller and you may be quickly outbid by someone who is already pre-approved, even if they’re offering less. In other situations, a pre-approval letter, bank statements, and other paperwork are required before you place an offer. Getting pre-approved will also give you peace of mind in an already stressful situation that you have the tools needed to acquire your new home.

Research Neighborhoods

The best piece of advice for anyone buying a new property is to buy the worst property in the best neighborhood, not the best property in the worst neighborhood. You may fall in love with a newly renovated home - it has granite counter tops, new appliances, and a large yard, something that can be difficult to find. However, if that home is in a neighborhood with high crime rates and poorly rated schools, a long-term investment will probably not be worth making. You may actually pay more for that home than you can resell it for later. Alternatively, if you buy a home that is not perfect, but in a great neighborhood and you take the time to make upgrades and renovate it, the value of the home will grow.

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