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The first step in the home-buying process is getting pre-approved for a mortgage. This helps you understand your budget and shows sellers that you are a serious buyer.
Before starting the process of buying your first home, assess your financial readiness. Ensure you can afford the down payment, which ranges from 3% to 20% of the home’s price, with 20% being ideal to avoid mortgage insurance. Account for closing costs (typically 3% to 7% of the purchase price), utilities, maintenance, property taxes, and homeowners’ insurance. Check your credit report for errors to avoid costly surprises, and confirm your credit score is strong enough to secure favorable loan terms.
The right loan term depends on your financial goals. Shorter terms build equity faster but require higher monthly payments. Longer terms offer lower payments and make qualifying for a larger loan easier, but you’ll pay more in interest over time. If you can, consider paying extra on a long-term loan to reduce the total interest.
A final walk-through is conducted shortly before closing to ensure the property is in the agreed-upon condition. Check that all lights, water, and appliances work, inspect for leaks, test doors and windows, and verify that any agreed-upon repairs have been completed. This step is not for renegotiation but to confirm the property’s readiness for move-in.
Closing costs are fees associated with finalizing your home purchase. These can include loan origination fees, title insurance, escrow fees, and property taxes. They typically range from 2% to 5% of the home’s purchase price. Some lenders may offer to cover closing costs, so it’s worth exploring your options.
A real estate agent not only finds properties but also assists in negotiations, helps you navigate paperwork, and connects you with trusted mortgage lenders. Their expertise can streamline the process and provide valuable insights.
When deciding on a location, consider factors like school districts, commute times, traffic patterns, and noise levels. Visit potential neighborhoods during rush hours to get a feel for the area. Research future developments that may impact the neighborhood’s desirability over time.
Owning a home is an investment. Unlike renting, where your money is gone, owning allows you to deduct mortgage interest and property taxes, saving you money. Your home's value may increase over time, and you'll have a space to make truly your own.
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