Before you even begin the process of looking for and buying a home, you should make sure the timing is right for you. If you have any reason to believe that you might relocate within the next few years, it is probably not the right time to buy a house. Also, if your financial situation is in flux, it is better to wait until it is stable. If you believe the timing is right, below are listed some of the best tips for buying your first home in 2022.
Having the money on hand to pay the down payment is very daunting for most first time buyers, because they have no existing house to sell to help with this. The best course of action is to have saved as much as possible in advance to cover this. Another option is to get help from family members. It is always best to pay as large as possible down payment – because it will lower your mortgage payment and start you off with positive equity in your home right away. It is not the best idea to borrow your down payment, as this will create higher monthly loan payments and could get you into financial trouble. However, if you are having trouble getting together your down payment, there are some first time home buyer programs to help you with this from the federal and state governments.
A mortgage is a form of special credit and thus you will need to qualify to get approved for such a loan. There are several factors that are involved with getting approved for a mortgage, but the two basic ones are credit worthiness and income strength. You should check your credit report in advance to see where you stand. Even if your credit score is good, any records of delinquent or missed payments can hamper you getting approved. The bottom line is to make sure your credit report is a strong as possible before you try to buy a home.
Also, you need to show a history of stable and strong income to assure the mortgage lender that you can reliably pay the mortgage payment every month. A good way to help with this is to not only increase your income, but to cut expenses such as credit card debt.
Although it is common to shop around for a mortgage after you pick out your desired home, it is wiser to select a mortgage lender first. The mortgage business is very competitive and if you shop around, you can often get the best deal that can end saving you many thousands of dollars. In other words, you should select your mortgage before you select your home. Not only should you look for the lowest interest and loan costs, but also favorable service. Loan terms like fair payment grace periods, no early payment penalties and friendly and accessible customer service are also very important.
Most important, it is extremely helpful and smart to get a mortgage pre-approval. This way, you know what you can qualify for and afford, and it gives you a tremendous advantage when dealing with the sellers of the home you select.
There are many different kinds of mortgages available. The traditional 30 year, fixed interest mortgage is the most famous as it provides a fixed and usually affordable monthly payment. However, if you choose a 20 or 15 year mortgage, you will pay many thousands of dollars less in interest over the life of the loan compared to a 30 year mortgage. Some mortgages offer lower monthly payments but are variable interest – which means your monthly payment can go up in the future. Even if you take a 30 year mortgage to keep your payments lower, you can save a lot of interest expense just by paying half of your payment two times a month – if your lender allows this.
Location of the home is a key factor in the price of the home. An exact duplicate of a house in a less desirable location will always be worth less than one in a better location. A desirable location is one with: a “good and safe neighborhood”, highly rated schools, good municipal services, fair property tax rate, access to shopping and transportation and other factors. In the long run, as a home purchase is a major investment, it pays to buy a home in as a good of location as possible.
The home you pick should meet your current and future needs, as far as size, number and types of rooms and amenities and features. Even if it isn’t exactly your dream home, it should have the possibility for future improvements or expansion to make it more so. Also, it is absolutely essential that you have a professional and current written appraisal and safety inspection of the home before you decide to buy it.
Even if a real estate agent is involved in the sale, remember that in most locations the agent actually works for the seller, not you. Therefore, it is advisable to hire and use a specialized agent known as a buyer’s representative. Also, you should always hire and use your own reputable real estate attorney to handle all the details of the home purchase.