First Time Home Buyer Tips

Congratulations are certainly in order when you're a first-time home buyer, but so are words of advice. The process of obtaining a home mortgage and buying a house is complex and it is vital to have experts you can consult with every step of the way. From pre-approval to closing on the home of your dreams, a good team will make your first home buying experience enjoyable.

Work With A Local Real Estate Agent and Mortgage Broker

One of the biggest mistakes you can make as a first-time homebuyer is to try to navigate the process without any guidance. Doing so opens you up to a planet of confusion and possibly worse. Working with a real estate agent and mortgage broker means that you'll go through the process in the most practical and productive manner. Furthermore, when you have questions about the process or about terms used in documents, you'll have trusted sources of information to guide you.

D. Shane Whitteker is the owner and chief broker at Principle Home Mortgage. He recommends going local to assemble your expert team for a number of reasons.

“It is important to choose a local realtor that understands the market and has access to local resources for inspections and anything else that may come up,” Whitteker says. “The same applies to your mortgage broker. Most brokers are smaller local shops that have an understanding of the local market. This becomes helpful if any issues come up in relation to the property and also helps the borrower to have proper advice when deciding what home to purchase.”

Get A Mortgage Pre-Approval

Inaccurate information about how the process works also leads a number of first-time homebuyers astray. For example, it is a common assumption that the best idea is to look at houses, make an offer on one and then see if the lending entity approves you for the mortgage. In fact, what you should do is obtain a pre-approval from your local mortgage broker. A pre-approval helps to determine how much house you can afford. This process is also effective because it helps you to narrow down the options.

Whitteker says a pre-approval is almost a mandatory pre-requisite to home buying.

“At this point most realtors and sellers will not allow a prospective buyer into the home without a pre-approval,” Whitteker says. “It is also important to know what you qualify for before trying to set up a contract. There are a lot of factors involved in selecting the correct mortgage product and with the overall pre-approval process.”

Save Your Money

Saving for a down payment for your home purchase can help you to get a better home, and if you put enough awayfor a mortgage down payment you can even save money - a 20% down payment means you won’t have to pay any mortgage insurance. There are some options for purchasing a home with little or no down payment – consult with your local mortgage broker to learn more.

Consider Starter Homes

As you're dreaming about home ownership, you might envision a mansion where you host lavish parties on a regular basis.Don’t fall into the trap of being house rich and cash poor. Consider if buying a house on the very upper end of your purchase window is a practical move or even a realistic one.The right starter home can put you on the path to a better financial picture. As you are just getting started with your life as a homeowner, you can keep more money in your bank account.

"‘House rich/cash poor’ is a term used to describe a scenario where a homeowner has a house that is at the maximum of their qualification and may actually cause a lot of financial stress in maintaining the mortgage and overall housing expenses,” Whitteker explains. “It’s important to develop a budget so this does not happen to you.”

Investigate Expansion Options

Another possibility is that you can afford a smaller home now but know that you will need a larger one in the future. While living through construction is difficult, renovation is possible, especially if you have relatives or friends with whom you could live while the work is underway. If you are thinking about expanding a house in the future, you want to make sure to purchase a property that has enough space for your visions. Furthermore, you want to be sure that you are actually allowed to expand the house in that neighborhood and that local regulations don’t prohibit it. For example, some historical houses are protected meaning that you cannot change them at all or only in certain ways.

Whitteker recommends keeping an eye on both the short term and long term impact your renovations will have.

“Pay attention to what you put your money into and whether or not the upgrades will cause the value of your home to increase,” Whitteker says. “This becomes far more important if you only intend to occupy the property for a certain period of time and plan to sell after this time elapses. Kitchens and bathrooms have the highest return in value increase compared to money spent.

Think About The Future

Of course, you also want to think practically about what the near future is going to bring to your life. For example, perhaps you and your partner have recently married and you are planning to have multiple children within the next few years. A small starter home might not work out too well if it does not have adequate space or enough bedrooms. In these cases, you may want to choose a larger house, or you might decide to wait a little bit longer to make the purchase.

Inspect The Kitchen and Bathroom

Painting some walls and or putting down new hardwood flooring are certainly projects that can take some time, but they typically do not compare to the amount of labor and money that is involved in a bathroom or kitchen renovation. Make these two rooms a priority when you are looking at houses. In other words, place an emphasis on ensuring that you purchase a house in which the kitchen and bathrooms will last you for the long haul. Also, consider the frustration of living in a house without a kitchen or a bathroom during construction. If the home only started with one bathroom, you would need to move out until the project was complete.

Watch For Fixer-Uppers

The thought of flipping a house might sound appealing to you. It's also possible that you feel okay with putting a decent amount of work into a house and making it your own. Still though, keep in mind that both of these endeavors can cost a decent amount of money and make a significant amount of work for you. Before you opt to take on either of these projects, consider consulting with trusted relatives or friends who will tell you the truth about what they experienced in the process.

“A fixer upper can be a good option for a number of reasons,” Whitteker says. “One reason is there will typically be less competition for this property. Another reason is that you are more likely to develop a higher amount of equity because of purchasing the property below market. This isn’t always the case but is more likely. You also have the ability to alter the property to fit your needs and wants better.”

Buying a house for the first time has many benefits that come along with it. To learn about the different types of mortgages available to you contact Williamsport PA mortgage broker Principle Home Mortgage at 814-308-0959.