Heads Up! 6 Challenges That First Time Home Buyer Face
Homebuyers need to go through a lot of processes and everything that a realtor tells them to do. Looking to own a house for the first time can be a challenging thing and you may have to face things you weren’t ready for or didn’t know. These are the challenges faced by first time home buyers.
Tips for first time home buyers
- Saving Up Cash
Home buying is not a cheap or easy process. If you are deciding to buy your own home in the foreseeable future then you must start saving up. An incredible amount of money is required to buy a house and then there are many other factors such as buyer’s agent fees, renovation, and other expenses. You may want to give up your current lifestyle in order to save that amount of cash. Smart decisions are to be made so that you don’t have to live under a rock. Keep track of where you spend your money and minimize unnecessary expenses.
- The Down Payment
The down payment is also another challenge requiring money. Most of the people require down payment of 10-20% of the actual price. First-time buyers have trouble paying that kind of money upfront. You can ask your realtor’s advice to decide upon the many types of home loans. They will advise you the best one to fit your situation. If the buyers have mortgage loan insured by the Federal Housing Administration, then the down payment is reduced to a mere 3.5 percent which means if you are looking to buy a house at $250,000 then the down payment would be $8,750 instead of $25000 in a 10 percent situation.
- Credit Scores
Credit scores are very important in the mortgage lending business. Many buyer’s agents look to work with people who have a credit score of at least 600. The credit score is increased according to your management of finances. Credit scores are important in getting you good interest rates with mortgage lenders. Credit scores between 400 and 800 are considered good and will get you suitable interest rates and mortgage money.
Most people make a mistake of sorting and searching houses according to the area they want to reside in and throwing away all the facts of prices in that area out the window. You may have your deposit but there are many steps further ahead to be done. First time home buyers must list the median house prices in different areas they want to buy and then compare each of them eventually deciding upon the one which you can easily afford.
- Overlooking the Full Financial Expense
Only paying off your mortgage isn’t enough to get you to move into a house immediately. There are lots of other factors that come into play. A good real estate agent will tell you all about these overlooked challenges. Partial renovation, taxes, maintenance, paying off more expensive utility bills are some of the factors that will affect your finances. Long term expenses are also to be considered thoroughly so when you go in the market, you have enough assets with you to support your desires.
- Mortgage Loans
Mortgage lenders lend you money to pay off your mortgage and settle in then expect a payback in an agreed-upon time. However, it’s not that simple. There are many factors that needed to be checked like the above-mentioned credit scores and financial history and even employment history. They check if you have paid back your loans in a sufficient amount of time and the flow of income.
Most mortgage lenders work with people who have a steady job with employment at the same firm for two years. First-time buyers may not have that type of employment history as they are mostly young people building up a career and jumping from job to job. However, some mortgage lenders tend to overlook this and focus on credit scores. They may look at your steady flow of income and how well you have managed your finances and will agree to give you a loan.
These challenges occur with first time home buyers, so a good buyer’s agent is recommended to hire.