Today’s real estate market presents lots of great opportunities for first-time homebuyers. The home-buying process can be difficult to navigate, especially for newbies. Here are some great tips for new homebuyers from Andovers, Mass.-based real estate professional Peggy Patenaude:
• Get your (financial) house in order. Before you even begin your home search, make sure you check your credit scores on an online credit reporting site. Tackle any points of dispute and make sure your credit looks attractive to potential lenders. Then collect appropriate financial documents, including retroactive tax forms, bank statements, and pay stubs to submit to your lender. According to Patenaude, securing preapproval for a mortgage before you start your home search is the optimal path to take.
• Do the math. There’s no sense playing a guessing game when it comes to what your mortgage payment will be, says Patenaude. Use an online mortgage calculator to help you determine whether you can comfortably afford your monthly payments. Be sure to factor in taxes for your area and homeowner’s insurance. Most lenders recommend that your housing payments exceed no more than 30 percent of your total income.
• Do your research! Working with a professional real estate agent will enable you to learn the value of comparable homes in the areas you’re most interested. These “comps” will help reveal whether or not the home you are considering is priced fairly, explains Patenaude.
• Plan for upfront costs. Your mortgage payment, taxes, and insurance are ongoing, but don’t forget to factor in the costs you will pay when you close your sale. Many fees contribute to closing costs.
• Consult a REALTOR®. Ask trusted friends and local resources for recommendations of a REALTOR® who can guide you through your first-time buying experience. The expertise of a trusted real estate professional can be your greatest asset.
• Don’t lose sight of the grand scheme of things. While homeownership is a great way to build wealth, you must be prepared for a variety of unforeseen expenses that crop up when you own a home. Patenaude advises that you make sure your income and savings can accommodate the unpredictable elements of homeownership.