Buying a new home can be stressful for first-time homebuyers. While it’s impossible to predict what will happen when you begin your homebuying journey, there are a few steps you can take to make the process less daunting.

We’ve created a home buying guide with 10 tips you should consider if you want to purchase a new home for the first time. Check out all the tips below before you begin searching for a home!

1. Choose a Location Before You Begin Your Search

If you’re in the market for a new home, it’s critical to decide which neighborhoods to target before starting your search. As the old saying goes: Location, location, location.

Narrowing down a few target neighborhoods can help you avoid wasting time when you begin looking for a home. House hunting can be time-consuming, so you don’t want to look in random areas only to find that the neighborhood has features that exclude it from your search criteria.

Explore school districts, crime rates, access to amenities, HOA fees, zoning laws, and other factors that can impact your life if you move into the neighborhood.

2. Decide on a Budget Before You View Homes

It’s critical to set a budget before you start looking at homes. It’s not prudent to view homes you cannot afford.

When you decide on a budget, consider the cost of any renovations or updates the house will require. Once you have your budget in place, it will be much easier to focus on homes you can afford.

3. Check Your Credit Score

Once you have a rough idea of your potential budget, it’s time to consider applying for a mortgage. One of the critical factors lenders will consider is your credit score, and a low credit score can result in a loan rejection or a much higher interest rate.

Always check your credit score before you apply for a mortgage. Many paid platforms allow you to check your credit score, but you are also entitled to a free credit report every year from each of the three major credit reporting bureaus.

If your credit score is low, consider ways that you can raise it before you apply for a mortgage. Paying off credit card debt and other forms of revolving debt can quickly improve your score. Also, checking your credit report for mistakes can dramatically improve your score – if there is an error on your report, you can request its removal.

Even if your score is strong enough for you to receive loan approval, it’s best to make sure that it’s as healthy as possible. The better your credit score is, the more likely you will receive an affordable interest rate. A reasonable interest rate can have substantial financial benefits in the long term.

4. Apply for Pre-Approval

Once your credit score is in order, it’s time to consider applying for a loan pre-approval. Pre-approval provides you with a pre-approved amount that you can borrow. While you’ll still need to go through a formal approval process when you choose a home, a pre-approval is a good ballpark figure to work with when you choose a home.

While you should already have a personal budget in place, a pre-approval adds more certainty. It helps you prove to realtors that you can afford the houses you want to view.

5. Choose a Fixed-Rate or Adjustable-Rate Mortgage

One of the most critical factors to consider when choosing a mortgage is the type of interest rate you will pursue. A fixed-rate will stay the same throughout your loan (or throughout a pre-determined period), and a variable interest rate will fluctuate as interest rates change.

A fixed-rate loan can help you budget in the long term, but a variable-rate loan can help you take advantage of lower interest rates in the future. If you want to live in your home for the entire mortgage duration (typically 30 years), a fixed rate is usually the best option. However, those planning to move in the next decade may prefer a variable loan.

6. See If You Qualify for Any Special Loans

The US government backs various loans that may be easier to attain if you fall into an eligible category. For example, if you’re a military veteran, you may be eligible for a VA Home Loan.

This is a loan that private lenders provide to military veterans. What makes the loan special is that the US government backs it, allowing the lenders to provide financing without worrying about associated risks, which means that VA Loans are often easier to attain.

Explore all the homebuyer programs available before you submit a lending application. It can make the entire process of buying your first home much less stressful.

7. Be Okay with Spending Below Your Pre-Approval

When you receive a pre-approval from a lender, it can be tempting to look for homes on the upper edge of your borrowing limit. While it can be exciting to see how much a bank is willing to lend you for a home, it’s critical to look for value regardless.

Don’t rule out homes because they’re not near your pre-approval limit. If you find the home of your dreams at a lower price, it will allow you to reduce your mortgage payments. Also, if you leave room in your budget, you can spend the extra money on improving a home below your budget.

8. A Cheaper House May Cost More in the Future 

While you should always look for a bargain, houses can cost a lot to renovate. If you find a home that seems like an excellent value, don’t forget to consider the future repair and renovation costs.

Replacing roofs, plumbing systems, wood floors, and other repairs can quickly become an expensive journey for a first-time homebuyer.

Make sure that you assess the condition of the home. If you’re trying to decide between two properties and one appears to need a lot of renovations, you should make sure it comes at a reduced price that enables you to afford those repairs.

Homes that require renovations cost more in the long term, and they can also reduce your quality of life. If you constantly need to renovate your home, the projects can begin to interfere with your day-to-day life. If you want to buy a cheaper home that requires more repair and renovation work, consider whether you can handle the time and hassle of scheduling repair work.

9. Never Close on a Home Without an Inspection

One of the biggest mistakes that new homeowners can make is purchasing a home without an inspection. Inspections allow a licensed professional to enter your future home and assess its condition from a builder’s perspective.

A home can look perfect from the outside, but this doesn’t mean there aren’t a million untold problems. Whether it’s termites, structural problems, cracks in the foundation, roof issues, or any other faults, you must identify them before closing the deal.

In most cases, your lender will require a full inspection before they’re willing to close on the home. Still, even if your lender doesn’t have this requirement, you should hire a third-party inspector to assess the property’s condition.

Never allow the seller to provide the inspector. You need a neutral party with no vested interest in the inspection results.

10. Secure Homeowners Insurance Quickly

Once you close on your home, it’s time to move in. While this will be an exciting time for you and your family, it’s critical to continue taking care of the administrative aspects of owning a home.

Purchase homeowners insurance to protect you from extensive property damage. Many mortgages require you to have homeowners insurance. This type of insurance can help you protect your investment.

Make sure to browse various insurance providers before you accept a policy. Most insurance providers will offer free quotes, so it’s easy to compare prices across the industry.

Also, the cheapest policy might not always be the best option. You should explore the policy to ensure it has the levels of coverage that you need for peace of mind. It’s also good to browse the insurer’s online reviews to make sure they have a good reputation – you don’t want to choose an insurer that has a reputation for not paying claims.

Call A and N Mortgage Today!

Being a first-time homebuyer can be overwhelming, but the A and N team hopes these tips will help you start on the right foot. If you’re ready to explore your mortgage options, call A and N Mortgage at (773) 305-LOAN today!