A Guide for First-Time Homebuyers

5 Tips for First-Time Homebuyers

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Know the Market

Websites like Trulia and Zillow will help you get a look at what the going rate is for homes in your area, and which direction prices are moving. While a knowledgeable realtor will help you navigate the intricacies of your local market, you can do a sizable amount of research yourself online. A house is a massive investment, so make sure you know all the upside and downside of your local market before your jump into it. Are prices moving up? Has the market bottomed out?

While local knowledge will make you a savvier home shopper, you ought to also consider the macroeconomic climate. In 2006, it was likely hard to tell that anything was amiss, but the situation changed very quickly. Still, it's not as if no one bought a home in 2008 and lost money on it. So be sure to consider the risks outside of your local market, too.

Know the Full Costs

Paying your mortgages is just part of your financial responsibilities as a homeowner. You'll also need to cover closing costs -- which can be pricy -- as well as homeowners insurance, property taxes and, depending on the structure of your mortgage, mortgage insurance. Use an online mortgage calculator if you want, but that won't give you an entirely accurate picture of your monthly costs.

Be Prepared for the Unexpected

No more landlord! You can do whatever you want to in your new home: knock out a wall, paint it all black, whatever. But now you have to pay for everything: plumbers, locksmiths, contractors, etc. You're your own landlord now, and you've got to pay the costs.

So while keeping to your monthly budget will be important for keeping up with your mortgage payments, insurance and taxes, unexpected costs will crop up.

Location, Location, Location

Real estate agents live and die by this tired mantra for a reason: it's almost all that matters. Your home's location will decide its value should anything in the local market change, your children's school district, your commute, your neighbors, your grocery store -- everything. Do you want a big home in a new tract development with no neighbors and a long commute? Or something more modest in an older neighborhood, with some nearby businesses, walking distance from school? It's unlikely that your two choices will be so drastically different, but these are the sorts of things you need to keep in mind when buying a home -- it's something you'll be keeping for a long time.

Get Your Credit Score Right

Studies have shown that as much as 80 percent of credit reports contain errors of some sort. Between this terrifying statistic and the host of other ways Americans needlessly harm their own credit (using a high percentage of their credit limit, for example), there are plenty of ways for your credit score to be artificially lower than it ought to be. You must not let this be the case when you go to get pre-approved for a loan. An artificially low credit score could cost you thousands and thousands of dollars over the course of your mortgage if you don't qualify for a lower rate.

Make absolutely sure that your credit score is in ship-shape before you think about buying your first home -- or it could cost you.

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