There is nothing quite like purchasing your first property. If you have finally taken the plunge to purchase your own house, you should know that there are key issues you must address to make your buying experience easier and more enjoyable. From purchasing the right home insurance in Renton, WA, to understanding crucial terms, here are just a few things you should know.
Do’s and Don’ts for First-Time Home Buyers
Do make sure you understand crucial terms
Ensure you know the industry terms such as APR (annual percentage rate), closing costs, and your term length. Ask the professionals to walk you through the process, and do not be afraid to ask questions if you’re unsure.
Do be prepared to act quickly and walk away if necessary
If you put an offer down and then find out that the house has a deal-breaker, like a compromised foundation, don’t be afraid to walk away. Similarly, if a house feels right, don’t wait too long to make a decision. Although it may seem too strange to act quickly on something that is the biggest purchase of your life, houses don’t tend to hang around long in the market. Ensure you have a checklist of what you want and what you need so that you’re only viewing houses that fit what you’re looking for.
Don’t look for a home before applying for a mortgage
Some buyers make the mistake of looking for a home before getting a mortgage pre-approval, that is, a lender’s approval to offer you a loan under specific terms. Some markets have high buyer demand than inventory, making them highly competitive. You could lose the property in a competitive market if you are not pre-approved for a home loan.
Getting a mortgage pre-approval is essential to know how much you can afford and avoid choosing properties beyond your budget. It also shows real estate agents and sellers that you are a serious buyer compared to other buyers who have not got a mortgage pre-approval.
Do check and strengthen your credit
Your credit score will determine whether you will be eligible for a mortgage loan with lower interest rates. Make sure to pay your bills on time and keep your credit card balances low to have a good credit score. Though credit score requirements vary for different types of loans, having a credit score above 740 is considered very good to excellent, helping you secure a loan with lower interest rates.
Do explore mortgage options
Make sure to explore various types of home loans available with varying eligibility requirements and down payments before choosing one. Possible options include:
- VA (Department of Veterans Affairs) Loans – No down payment
- Conventional Mortgages – Minimum down payment is 3%
- FHA (Federal Housing Administration) Loans – Minimum down payment is 3.5%
- USDA (US Department of Agriculture) Loans – No down payment
Don’t underestimate your monthly costs
Even after you find a mortgage with interest rates to meet your budget, there are other costs to factor in, such as utilities, new furniture, and home improvement. Closing costs may range from 1% to 5% of the purchase price, and you should be prepared for these costs, as well as anything unexpected.
Don’t forget to protect your home
As a new homeowner, you will need homeowners insurance to safeguard your new investment. This protects your property and belongings from damage such as fire, theft, and natural disasters and provides valuable liability coverage.
Home insurance is incredibly important to protect your first property. When you need to find coverage to suit your budget, talk to the professionals at Humble & Davenport Insurance today.