Say you are ready to make the move from renting to owning. First, you must ensure that you have all the details correct before completing one of the most significant investments of your life. From having enough saved for a down payment to understanding the extra costs of closing on a home (and even what types of mortgages and assistance are available to you), here are five things you might not know about becoming a first-time homebuyer.
1. It’s never too early to start saving
Buying a home is an expensive investment. You should start saving as soon as possible to accumulate the funds you need to buy your first home. While you can provide a down payment as low as three percent with good credit, the larger the down payment you provide, the lower your monthly mortgage cost will be. Determine the size of home you need and the maximum amount of home you can afford, then calculate how much you need to start saving to meet that goal.
While saving up to buy your first home, don’t forget to keep an eye on your credit score. Your credit score will have a substantial impact on the mortgages that you will qualify for. Use your credit wisely. Think twice about making large investments, like a new car, when you are ready to buy a home. Significant investments can make your credit score drop for some time, lowering your score when you need it to be as high as possible.
2. Get mortgage pre-approval
When you are ready to start looking at Sands Point houses for sale, you probably need to get pre-approved for a mortgage. Before looking for the perfect home, you need to know how much home you can afford. Shop around with different lenders and compare how much they will lend you and how much interest you will be responsible for paying. After you have a pre-approved mortgage amount, don’t start looking for homes at the maximum amount you were pre-approved for. You should include some cushion for negotiation and extra charges while buying the house.
Additionally, getting pre-approval for a loan helps you look like a serious buyer. The current homeowner will likely take your offer more seriously if they know you have the financial backing to cover the cost. While you can also get mortgage pre-qualification, pre-approval is better. Lenders will look closer at your financial situation when providing you with mortgage pre-approval to give you a more accurate assessment of the amount of mortgage you can afford.
3. Factor in the cost of closing on a home
More costs go into buying your first piece of Sands Point real estate than just the home's final price. As a first-time homebuyer, you will need to research these costs and ensure you are factoring them into your savings. You may need to pay attorney fees, inspection fees, property taxes, and appraisal fees. These are just a few possible expenses, so consult your agent to fully understand all the additional costs that go into closing before searching for your first home.
You need to factor in the cost of moving as well. To that end, make any repairs required on your previous home. Then decide whether to move your belongings yourself or hire a moving company. Include these additional costs in your savings plan so they do not sneak up on you when you are ready to move.
4. Types of mortgages
While you want to shop around for different lenders who will provide you with a mortgage for your Sands Point real estate, you also need to understand that there are different types of mortgages for which you could qualify. A conventional loan will be the best option if you have a good credit score. Meanwhile, a jumbo loan is appropriate if you have excellent credit and are going to purchase an expensive home.
If you have a low credit score and minimal cash for a down payment, you could qualify for a government-issued loan. There are also fixed-rate and adjustable-rate mortgages depending on whether you want a set monthly payment or prefer to pay lower amounts now (and potentially pay more in the future). Make sure you research the types of mortgages available to choose the right one for your financial situation.
5. First-time homebuyer assistance
The United States government offers several resources for first-time homebuyer assistance. The Department of Housing and Urban Development offers programs that make homeownership affordable, including their Good Neighbor Next Door Program, which provides discounts for public servants. Fannie Mae and Freddie Mac are two government-sponsored entities that help first-time homebuyers make a home purchase with a small down payment. New York also offers first-time homebuyer assistance programs to help qualified buyers purchase their first home.
When you are ready to start looking for your first home to buy, you need to work with a real estate professional. This broker should pride themselves on professionalism and attention to detail. They should be motivated by the challenges that come with the real estate industry and work to provide you with the best experience possible as a first-time homebuyer. Maggie Keats is a full-time real estate broker who provides her clients individualized attention to give them peace of mind throughout the process. Reach out to Maggie Keats and start looking at homes for sale in Port Washington, Sands Point, or anywhere else on the North Shore.
