Are you a first-time homebuyer? Purchasing a home for the first time can be overwhelming. Owning a home is a significant obligation, and it is one of the prime financial choices you will ever make. This means that it is essential to take this decision seriously. You will also need time to prepare yourself for this significant milestone.
Here are a few tips that will make your homeownership journey seamless.
Know When is the Best Time to Buy a Home
Taking the steps in the home buying process is one of the most significant investments you will make in your life. Today, housing prices in many US markets are on the rise.
Identifying the best time correctly to purchase a home can save you money. Homeownership is more expensive than renting, and you will need a mortgage to buy one.
There are many homeowners whose finances are a mess. This is because apart from mortgage and insurance, there are added costs like home repair, utility costs, garbage, water, and electricity. These costs can add up quickly, and if you are not financially stable, you may end up in a mess.
So, what is the best time for you as a first-home buyer to purchase a house?
Buy when You Are Financially Ready
The best time to buy a home is when you are financially ready. For most of you, you’ll need a mortgage to pay for your first home, a good credit score, a steady job, and a massive chunk of money for a down payment.
The standard down payment usually is 20% of the total price of the home. If your down payment is less than 20%, your mortgage interest rates will be higher, which will translate to higher closing costs. You will also have to pay for Private Mortgage Insurance (PMI), which leads to added costs.
It is advisable to wait until you have saved enough to afford a 20% down payment to cut on high interests and other added costs.
Timing the Housing Market is Key
Timing is everything when buying a house for the first time. The sellers/ buyers’ market keeps on shifting. A buyers’ market is when there are few buyers than sellers, and the prices are low. If you want to find the best value for your budget, the ideal time to buy a house is when the prices are low.
There are certain times in the year that favor buyers than sellers. During these periods, house prices tend to drop dramatically, which means buying a house at this time will save you much.
The best time to buy a house in the US is during the autumn and winter. During these seasons, the prices of the house can be 8.45% less than they are in June and August. This means that there is less competition in the market. Sellers listing their homes in the market during the fall and winter season are eager to sell and would be willing to take a lower deal.
Summer is the most popular time for people in the US to move. Many sellers wait till spring to list their homes in the market. This is a sellers’ market, and prices are higher since demand is higher.
Homebuyers experience a bidding war as homeowners consider multiple offers from interested buyers. If your goal is to get the best house deal, this is not the time to buy a house.
Know When to Look for a House
Hunting for a house that matches your preference is another challenge. While this article suggests buying a home during winter, there is a lower option of houses.
This means that it can be challenging to get your ideal home. During summer, you’ll see more listings where you have a great option of houses to choose from; however, prices will be higher.
If you find an ideal house in winter, that you can pay for less, that is a plus.
If you are in a warmer climate, seasonal differences in house pricing may not be there. It is good to conduct local research on the pricing trends since real estate markets vary. This will help you get the right house at an affordable price.
Look for Creative Financing Options like State/ local Assistant Programs
One challenge of a soon-to-be-homeowner is the interest rate they will be given when applying for a loan. The mortgage interest rates impact the overall long-term cost of buying a house. Mortgage rates are tied to the supply and demand rule, which are determined by the current market conditions.
Your credit score can have a massive difference in your mortgage interest rate. It would be best if you had solid finances and stellar credit histories for you to enjoy the lowest mortgage interest rates.
The good thing is that there are special mortgage programs that can help you if you are struggling to finance your down payment. They include;
First Time Home Buyers Program
If you have not had a US mortgage in the last three years, you qualify for this program. You enjoy perks like discounted interest rates, closing costs assistance, tax credits, and down payment assistance.
These loans are offered by the US Department of Veterans Affairs (VA) for veterans, US military members, and surviving spouses. These loans require no down payment.
Federal Housing Administration Loan
These are loans issued by the Federal Housing Administration and only require a down payment of as low as 3.5%.
The US Department of Agriculture subsidizes this mortgage. It offers insurance for buyers who meet specific income qualifications. USDA offers home loans and mortgages in rural areas to specific people with moderate income. You can use this USDA rural housing map to check the eligibility requirement.
Most of these mortgages are issued by private lenders but conform to the standard set by the government. They include entities like Fannie Mae and Freddie that only require a 3% down payment for people with specific income qualifications.
With excellent timing, you can make the dream of owning your own home come true. Follow these simple tips, and your home hunting journey will be less bumpy.