One of the most exciting parts of buying your first home is getting to tour so many beautiful houses. It’s understandable, then, why many first-time buyers skip right to that part of the home-buying process. But, as any good realtor can tell you, it’s what you do before you start searching for a house that determines whether the experience is a fun or frustrating one.
In this first of a 2-part series, we walk you through a series of tips covering what you should do to prepare for your home-buying adventure, including how to choose the right mortgage. In part two, we’ll share home shopping and buying tips.
As a high end real estate company dealing in luxury properties, we’ve had lots of opportunities to observe what makes the difference in whether our clients have an enjoyable home-buying process or not. More often than not, it comes down to finance-related issues.
Most experts agree the best step first-time homebuyers can take is to start saving early—because there’s much more to buying a house than the asking price.
Down payments and closing costs are substantial, particularly on higher-end properties. Though first-time buyers with excellent credit can obtain a mortgage with as little as 3% down, if you’re purchasing a high six or seven-figure property, that can still mean tens or hundreds of thousands more dollars upfront. Add on another 2% to 6% of your loan amount for closing costs.
Be honest with yourself about how much house you can afford. Your realtor can assist you in setting a price range based on where you want to live, your income, debt, and more. You can also use an online home affordability calculator to help you determine how much house you can afford.
Check and strengthen your credit score. How much interest a lender charges you depends largely on the strength of your credit history. Order a free copy of each of your credit reports and check them for errors that need disputing. It’s also a good idea to track your credit score during the home-buying process to stay on top of any changes. Checking your credit report regularly does not affect your score.
Explore mortgage options. Most homebuyers have access to conventional and FHA loans. USDA loans are for rural homebuyers, and VA loans are available to current and veteran military service members. Talk to your lender about your options, including whether a 15 or 30-year mortgage is right for you. And don’t be afraid to shop around and compare mortgage rates and fees; they can vary widely.
Get preapproved. A preapproval letter lets your realtor and home sellers know you’re a serious buyer who can obtain financing.
When you work with one of the realtor agents at St. Helena Real Estate, you gain a valuable ally in your search for the perfect home. We thoroughly understand the high-end real estate market and are ready to assist you in finding a property that meets your budget and wishes. To learn more, contact us today!