Buying a new home is a rite of passage in the quest for the American dream. It’s also a painstaking process, especially if you’re a first-time homebuyer. There are so many critical decisions to make. Would you rather live in the city, suburbs, or a rural area? Where are the best schools? You have to include a litany of factors into your decision-making process to find the ideal new home for you and your family.
Don’t you wish homebuying was more like car buying? You know, you see a home, haggle a little until you get the mortgage and interest rate you want, make your monthly payments, and everyone’s happy! However, with the complexity of the housing market and home buying process, it would be a good idea to take a first-time home buyer’s class to learn as much as you can. However, if you don’t have time to add home buyer’s classes to your busy schedule, this simple guide should do you some good.
It would be best if you worked on your credit score.
Most schools don’t teach students how credit works, but from the time you enter the real world, so much of your ability to survive depends on it. Your credit score plays an integral role in what kind of new home you can buy as well as your mortgage rate. The higher your credit score is, the easier it will be for you to qualify for a home loan. You’ll also get a more favorable interest rate.
The rule of thumb is that your FICO credit score should be at least 620 when shopping for home loans. Even if your score is lower, you can still qualify for an FHA loan. With a down payment of 10% of the home’s value, they’ll back your loan no matter what your credit score is.
Whether your credit is good or bad, it’s still critical to shop around to find the best home loan rates. Be wise and look high and low for the best rate, or you could end up settling for a mortgage you can’t afford. Lenders will find a way to get their money back for the house whether you keep the home or not. Do your due diligence to ensure you get the best mortgage rate so you can get as much value as possible out of your home.
You need to save up for your down payment.
Besides shopping for a home loan, saving up for the down payment may be the hardest part of the buying process. New homes are expensive, so even 10% of a home is a lot of money to save. Many experts say you should save at least 20% of the home’s value for a down payment. However, the average home value in the United States is over $200,000, which would mean saving over $40,000. That’s not a realistic goal for most people, especially those raising families.
On the other hand, as long as you have a good looking credit report, many lenders will only require a 10% down payment. If you have poor credit and apply for an FHA insured loan, your down payment could be as low as 3.5% of the home’s value.
The advantage of paying more down is that you start with more equity in your new home. Equity is the percentage of the home you own. For instance, if you were to pay a quarter of the home’s value as a down payment, then you would have 25% equity in the home. The more equity you have in the home, the more the home will be worth to you in a resale.
You should also save up for closing costs.
One of the things few new homeowners think about is closing costs. Whenever you purchase a new home, you can expect to pay between 2% and 7% of the home’s value in closing costs. Those costs rise to over $13,000 for the median home in the U.S.
Many people roll their closing costs into their monthly mortgage payments. The benefit of paying your closing costs upfront is that your mortgage payments will be lower. If you want to get a lower rate for your mortgage payments, then you should do your best to pay all, or at least half, of your closing costs when you purchase the home.
How much of your old stuff do you want to bring into your new house?
While relocating is exciting, it’s also one of the most stressful things you’ll ever endure. You’ll find out how much you and your family really love each other once you start lugging around heavy furniture together.
To ensure your family’s safety and most valuable belongings, you should leave the heavy lifting to a professional moving company like Solomon and Sons Relocation. They’ve been one of the best moving companies in South Florida since their start in 2014. They provide relocation services for local moves as well as moves to anywhere in the U.S.
Believe it or not, one of the most stressful things people fret over when moving into a new house is what to do with all of their old stuff. Many people battle over how much, if any, of their old belongings they want to bring with them into their new space. It makes sense for new homeowners to want completely new things to accentuate and christen their new space, but that still leaves the problem of what to do with your old belongings.
If you’re moving into a new place and purchasing all new furniture, then the best option is to get a storage unit for old belongings that will only waste space. Solomon and Sons Relocation offers long-term storage as well as relocation services. To learn more about their award-winning relocation and storage services, visit their website at ssrelocation.com.
What are the energy costs like where you’re moving?
Many people overlook the importance of energy costs during the home buying process. If you get a 30-year mortgage loan, then you’re probably going to be in the home for quite a few years. That means you’re going to spend a lot of money there on electricity over the years, so you might as well get your electricity at the best rate possible.
Many areas have democratized their electric grid, allowing for competition in the electricity industry. That means you can shop around for the best electrical services in your area by searching online for “electric prices in NI” or wherever you’re located instead of settling for whatever you’re offered. On the Moneygains platform, you can compare electricity providers and plans by how much they charge per KWH. You’re now in more control of your electricity bill than ever before.
Search around for the best schools.
If you have children or are planning a family, then that adds another factor to consider. Unless you’re sending your kids to private school, your address dictates what elementary, middle, and high schools they’ll attend. When looking at potential homes, you should also find out about the school district the home is in.
The harsh reality is that all schools aren’t created equally. School funding is based on property taxes, so the higher the property value in a particular area, the more funding for those schools.
However, more money doesn’t always mean better schools—that’s why it’s crucial to do your own research on the schools in the area. Remember, buying a home isn’t just finding somewhere to live—it’s also an integral part of planning for your children’s futures.