Are you ready to reach the milestone in life of purchasing your first home? Congratulations! Buying a new home is exciting, but it can also be daunting. Our team wants to help you prepare for buying your first home with these four first-time home buyer tips below.
First-time home buyer tips
- Check your credit score — When you are first thinking about buying a home, one of the first things you should do is check your credit score. A good credit score can help you secure a lower mortgage rate. If your credit score needs a boost, you can help by making sure you pay bills on time and keep your credit balances low.
- Buy within your limits — It may go without saying, but avoid buying a house that stretches the upper limits of what you can afford. There are other costs associated with owning a house beside the initial purchase. Your mortgage, costs of maintaining a home and unexpected emergencies (which you should have saved for as well) can make owning your new home a more stressful than rewarding experience. Speaking of other costs …
- Consider the other costs — You need to make a list of all potential expected expenses you may need to cover as a homeowner. Will your new home require repairs? Do you plan on painting or remodeling? Do you plan on installing new flooring? Do you need to buy lawn care equipment or hire someone to care for your lawn? Will utilities be more expensive than they were in your previous home?
Add up all these costs and make sure they will fit into your budget of owning a new home before making a purchase decision.
- Put down a sizable down payment — Providing a high down payment helps you secure a better loan for your mortgage. A down payment of at least 20% of the home’s value helps you avoid having to carry private mortgage insurance (PMI).
PMI is required by lenders to secure a mortgage if your down payment is less than 20%. This means, in addition to your mortgage payments, you need to pay for PMI until your loan-to-value ratio is 80%.
In addition to avoiding PMI premiums, putting down a higher down payment helps you negotiate a lower interest rate and secure the purchase over other interested buyers who may be making less serious offers.
Talk to a ProVise CFP® professional about first-time home buyer tips
Are you ready to buy your first home but do not know if you are in a financially secure place for it? Our team can help you review your current finances, your financial plan and your goals to see if they are in line with your vision for your new home purchase.
At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about financial planning for new homeowners? Contact ProVise today to schedule a complimentary consultation.