A house can be an ideal investment and a great way to avoid steep rental prices. Nowadays, even businesses recognize the value of owning property, with successful firms investing as much as 50% of their assets in real estate.
Purchasing a property involves a lengthy real estate transaction, especially for the first-time homebuyer.
In this article, we offer five tips for those new to the real estate business, helping you save time, money, and stress.
1. Check Your Credit Score
Because a good credit score can make it significantly easier to obtain a mortgage, as well as lower interest and down payments, one of the first things to do when considering buying a house is to check your credit score. If your credit score is lower than desired, do not fret, buying a home is still possible albeit slightly more difficult.
If this option is difficult for you or you need a home more quickly, there are some options for those with a credit score lower than 650. The Federal Housing Administration (FHA) loan specifically for persons with poor credit and high-interest sub-prime mortgages make home ownership much more accessible to people from a variety of financial backgrounds.
These financing options do often come with higher insurance premiums, down payments, and interest rates attached, so make sure to do your homework before making any decisions.
2. Plan for Expensive Closing Costs
While some of the closing costs attached to a real estate transaction fall on the seller, homebuyers generally pay the majority of these often exorbitant fees. What this means for the first-time homebuyer is that it is essential not only to save up for a house but to also save for these closing costs, which can be as high as 2-5% of a home’s purchase price.
These fees can cover such things as insurance, appraisal fees, commission fees, inspection charges, and an abundance of additional costs that essentially lead to a large drain on one’s bank account.
3. Decide Whether You Prefer a New or Preexisting Home
People often initially think that buying a home is like buying a car—if you buy new then you know all of your investment’s history and receive it in perfect condition.
Buying a home, however, is very different from buying a car.
First, due to the nature of the real estate transaction process, owners are nearly always obligated to provide you with a home’s current state and background in terms of upgrades, damages, renovations, and alterations. You will furthermore have inspections completed by an outside party, meaning that you never have to worry about buying a lemon.
Buying an older home means that you can get a better feel for the location and the market since the neighborhood is already established. On the other hand, newer homes tend to have lower maintenance costs, financing is generally easier to procure, and repairs are less likely to be needed.
Both newer and older homes provide many possibilities, so ensure that you know which option is the best fit.
4. Consider Repairs and Upgrades
Particularly when buying an older home, it is important to plan ahead for the costs and labor associated with repairs. Unless you are well-versed in home restoration and alteration, such modifications can be quite costly and inconvenient.
By purchasing a new home or a home from an experienced real estate home buying network, however, you can often negotiate to have such improvements included in home cost and completed before your move-in date.
5. Hire Experts as Needed
Whether it’s relying on an appraiser to look over your potential home, working with skilled contractors, or drawing upon the talents of experienced real estate professionals, it is always a good idea to hire someone who has a necessary skill when you are anything but an expert in a real estate-related field.
Patience Is Key
Considering performing your own home repairs?
- Make sure that you have adequate knowledge of carpentry, electricity, and appliances or you risk both your safety and the value of your home.
Skipping the appraisal process?
- Ensure that you have the necessary knowledge to notice such qualities as structural integrity, interior conditioning, and amenity attributes.
In short, unless you work in the home repair or real estate industry, make sure to rely on the expertise of others when you are buying a home.
Now that you have these essential tips, it’s time to get started with that home search. By depending on reliable professionals, working with or around your credit score, saving appropriately, and making key decisions in a timely manner, you’ll be living in the home of your dreams in no time.