After years of saving, or maybe with the help of family or winning the lottery, the time has come for you to be a first-time home buyer! If you’re a first-time homebuyer, there are many things to consider before you start looking for your new place. So, read on to learn more about how to best prepare for buying a home.
- How much house you can afford – How much house you afford depends on several things including income, credit, debt to income ratio, and down payment. Many recommend following the 28/36% rule. This means not spending more than 28% on housing and no more than 36% on total debt.
- Educate yourself on the different mortgage options – There are a lot of options and it can be easy to get confused. If you are a veteran you may eligible for a VHA loan. The VHA loan can be attractive to first time home buyers for several reasons. This includes 0% down payment, limited closing costs, and low interest rates. Another option for those that don’t qualify for the VHA loan is the FHA loan. The FHA loan is open to first time home buyers. This loan might be alluring if you have a lower credit score, or you have a low down payment. One thing to keep in mind with the FHA loan is that you are required to have mortgage insurance. This means you may have a higher monthly payment. With a normal home loan, mortgage insurance isn’t a requirement, so you may have a lower monthly payment, even if you have a higher interest rate.
- Find a realtor that you want to work with – There are several ways to go about finding the perfect realtor for your needs. Our number one suggestion is to ask family and friends who they used when purchasing their house. Try to work with a realtor that is local to the area that you want to buy in. They will often have insight that out of town realtors don’t. Take your time and research realtors, ask them lots of questions. You’ll be spending quite a bit of time with your realtor. So, make sure that you’re comfortable with them.
If you want to learn more as a first-time home buyer, we recommend checking out the following videos by Pistol Pete Eubank, one of our top producers. He goes over tons of great info on his Youtube channel, including house hacking, how much house you can afford, and slow flips. Good luck and happy house hunting!
The Madani team and ROOM Real Estate have been helping home buyers and sellers in Santa Cruz County for almost two decades. Equipped with a large team of dedicated agents and staff, ROOM Real Estate works tirelessly to help its clients accomplish their real estate goals. We are here for you; and all of your real estate-related needs.