Buying your first home is a huge first step. Between applying for mortgages, hiring a real estate agent, and going to see multiple homes for sale, there's a lot to experience. It's important to keep your wits about you and not to get so wrapped up in the excitement that you end up overspending or buying a house that's not suitable. How can you avoid these mistakes? One option is to remember the acronym, SHED, outlined below.
Save More Than You Think You'll Need
Closing on a home often ends up costing more than you think. You'll need a down payment, of course. The amount of that down payment will depend on the type of mortgage you're taking out and the price of the home. On top of the down payment, though, you will also need to pay your real estate lawyer, surveyor, inspector, and some back taxes. A good guideline is to save at least $5,000 in addition to your down payment to put towards closing costs. The more money you can save right now, the better.
Hire The Right Agent
Don't just hire the first real estate agent you find. Take your time to meet with a few agents, and then work with one you get along with best. Your agent should have plenty of experience working with first-time home buyers and should be willing and able to answer all of your questions.
Explore Your Mortgage Options
Don't just assume a conventional mortgage is your best option. For many first-time home buyers, an FHA mortgage is a good choice. The down payment requirements and credit score requirements are lower. A VA mortgage is also a good choice if you qualify by being a member of the military or veteran. Talk with a mortgage officer and ask them to recommend a mortgage type for you based on your financial history and income.
Don't buy the first home you see. You probably should not buy the second home you see, either. Take your time, look at plenty of homes, and develop your sense of what you like and what you don't like. As a first-time homebuyer, it is easy to get overly excited about a home that is not as well suited to your needs as you might initially think. If you slow down and take your time, you're less likely to overlook something important.
If you remember the acronym SHED and adhere to the principles above, you should be able to find a new home. For more information, contact agents who specialize in residential real estate.