Five Things First-Time Homebuyers Need to Keep in Mind

by John Hassler 10/18/2020

Photo by ConvertKit on Unsplash

Up to 9.2 million Americans will purchase their first home in 2020. Homeownership is a wonderful and sometimes overwhelming experience. It's exciting to have a place that you can personalize and call your own. However, owning a home can quickly become a burden if you don't plan carefully. Keep in mind these five tips to make your first-time home-buying experience a success.

Essential tips for first-time homebuyers

1. Save until you have a 20 percent down payment.

Paying cash for a home is out of reach of most families. However, there are big advantages if you have at least a 20 percent down payment to offer. This automatically means that you won't have to pay for private mortgage insurance (PMI), something that generally adds a full one percent to the cost of your loan. In addition, a sizable down payment means you'll likely have equity in your home when it comes time to sell.

2. Get pre-approved for a loan.

When shopping for your first home, it's easy to fall in love with a property that may be a little beyond what you can comfortably afford. Getting pre-approved for a loan lets you know what you can safely pay for home payments. Plus, the sellers will know that you're serious about buying and that financing won't be a problem for you.

3. Get your agent's advice on how much to bid.

Real estate markets vary dramatically around the United States. Your local real estate agent is well-suited to help you navigate the market in your particular region. In some high-demand areas, you may need to offer more than the listed price, but in most areas, a seller is likely to accept an offer below the listing price, especially if the property has been on the market for a few months.

4. Be prepared for closing costs.

Closing costs, the money that you'll owe at closing for property taxes, title insurance, the title company's fee and other related costs, can be a surprise to a first-time homebuyer. These costs can vary between 3 and 5 percent of the total purchase price. The average closing costs for a single family home is $3,700 and is due when you sign the purchase papers, usually between 30 and 45 days after your offer is accepted.

5. Make sure you have an emergency fund.

While it may be tempting to sink your all of savings into your new home, what with a deposit, closing costs, insurance and doing any necessary remodeling, it's important to put a few months' mortgage payments in an emergency fund just in case life throws you a curveball. Many things can affect even the most responsible homebuyer's ability to pay their mortgage, things such as illness, job loss or a reduction in work hours. Plus, you'll sleep better at night knowing that you have that financial cushion.

About the Author
Author

John Hassler

Our goal is overcoming the housing challenge and getting to know one another, here is a bit about me. Providing you with professional guidance for buying and selling homes stems from an in-depth knowledge of the Twin Cities Best Homes and Neighborhoods. For us, the process is a simple one and starts with a conversation about your needs, desires and concerns. No contracts or promises up front. I ask only for the opportunity to understand your housing needs and have you become comfortable with my real estate knowledge and experience. I have lived throughout the metro area, have sold close to 1000 homes as well as built, remodeled and designed homes. My passion is assisting you in discovering that perfect home, location and setting that will bring you and your family pleasure and comfort for years to come. I would enjoy the opportunity to meet with you at your home, business or over a cup of coffee. I am readily available by email, text and enjoy a phone call as well. Please don’t hesitate to contact me, as I always enjoy a new opportunity to help someone!