First Time Home Buyers: Financial Tips
Becoming a first-time home buyer is an exciting milestone in life, but it can also be a time of anxiety when trying to understand the financial aspects. According to Zillow.com, first time homebuyers need to understand a few critical points when financing a home for the first time.
Many soon to be buyers, think they cannot afford to buy or may not qualify for a home loan. This is not true. There are many lending options, some of which require smaller down payments than the ideal 20 percent. Federal Housing Administration (FHA), Veterans Affairs (VA), and USDA Rural Development loans are all backed by the government and provide additional options for individuals who may not qualify for a conventional loan. While these loans may provide lesser down payment options, they do carry other standards that must be met to qualify.
Most lenders will provide home buyers a pre-approval or pre-qualification letter that includes the MAXIMUM amount they will lend. While this amount may cover the list price of the home, it may not be enough to cover other expenses, like closing costs or upfront costs. An experienced realtor can provide guidance to home buyers in regard to common costs and closing costs associated with buying a home.
Additional Monthly Costs
Making the leap from renting to home buying can prove to be a sound investment choice, but buyers must be aware of monthly costs not associated with renting. Maintenance, often covered in a lease, will now be the buyer’s responsibility, along with lawn care and outdoor upkeep. If the home purchased is part of a Home Owner’s Association, this will also be a new expense. And, the first-time home buyer should be aware of property taxes and homeowner’s insurance.
With an experienced, knowledgeable real estate team, first-time home buyers can feel a sense of relief, knowing they are not alone in this process.