Buying your first home is a very big deal. In order to navigate through the sometimes confusing and often overwhelming waters of the real estate market, here are just a few tips for the first time home buyer.
One of the most important things for the first time home buyer to consider in the wake of the housing crisis is affordability. Many of the homeowners who found themselves in foreclosure ended up there because they could not afford the mortgage payments they agreed to. Some had adjustable rate mortgages to keep initial payments down, but could not afford the payments when the rates reset; others simply overextended themselves from the start and could not maintain the payment over time. In either case the situation could have been avoided had the buyer properly determined what they could comfortably afford and stayed within that budget. Remember that the loan officers and real estate agents paid to assist you will make more money if you spend more. Determine for yourself what you can afford to pay each month for principle, interest, taxes and insurance and do not exceed that amount.
Know what loans you qualify for
When you have calculated what you can afford to pay each month, you can use that amount to determine the maximum loan amount you can afford, but first you need to know what type of financing you will qualify for. Conforming loan guidelines are available from any number of online sources. Factors like interest rates and tax rates have a direct effect on what portion of the amount that you have budgeted for a monthly housing payment can be used to calculate how much you can borrow. The better your credit, the better the loan terms you will qualify for, so know what your credit rating is and do what you can to correct any delinquencies for the best interest rates. The lower your interest rate, the more home you can afford.
Research available first time buyer programs
Many individual states offer incentives for the first time home buyer that can assist with down payments and closing costs. Information regarding the qualifications for these programs are available to anyone online by accessing your state’s website. Knowing about the programs available from your state can offer welcome assistance for the costs that can sometimes make purchasing your first home difficult.
Something else that can save the first time home buyer thousands can be found on your state’s department of licensing website. The required real estate training to earn a real estate license can usually be completed in just a few weeks and in many cases for less than $500.00. Taking a couple of weeks to learn about the business of real estate will not only give the first time home buyer essential skills that they can use to make the best deal, but if you get your real estate license you can earn a commission when you buy your first home.
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About David Goldstein — David Goldstein is an Owner and Founding Partner of Express Schools, LLC. which operates online education providers Real Estate Express, Insurance License Express and License Tutor. Follow him on Twitter.