Being a homeowner is beneficial because you’ll have fewer things to worry about. The most important benefit is that any money that goes into your house increases its value, as opposed to rent. However, homeownership is also a responsibility because a house is an investment you must protect. Because of this, buying a home can be a nerve-wracking experience, especially if you’re a first-time homebuyer.
The housing market is highly volatile at the moment, especially for buyers. It’s no secret that the economy is in a bit of a slump—property sales are down, prices are dropping, and lenders aren’t being as lenient as they once were. The good news is that there are many ways buyers can improve their chances, such as:
#1 – Get Pre-approved
Getting pre-approved is important because a lender can give you a clearer idea of the type of mortgage you qualify for—and, therefore, your price range. Getting pre-approved also tells the seller that you’re a serious buyer, as it can fast-track a mortgage and close a deal more quickly!
Let’s say you decide to purchase a property worth $200,000. You’re pre-approved for a mortgage worth $150,000 and only have $10,000 in cash. Because you’re pre-approved, you ask the agent to find you a property worth $150,000. If you don’t know what you can afford and what you can buy, you could end up purchasing a property you can’t afford.
#2 – Understand Your Credit Score
Your credit score plays a vital role in the home buying process. Having a good credit score will benefit you in getting the lowest mortgage rates, closing costs, and down payment.
Investing in a home is a huge financial decision, so you must pay close attention to your credit score. Understanding your credit score will help you make informed decisions about your finances. If you have a lower credit score, just remember there are numerous ways you can boost it to help this process go more smoothly!
#3 – Remember to Shop Around
Homebuyers need to understand that not all lenders are the same. Some lenders have more lenient standards, while others require higher credit scores and lower debt ratios. Because of this, a homebuyer should shop around to ensure they get the best deal. Information is just as important as shopping around because you need to know what to expect from each lender before you settle for one.
The same also goes for the property itself. As a buyer, you want to ensure that the property you want is the best deal. You wouldn’t want to pay too much for a property, so be sure you’re comparing the price to other similar properties in the area.
#4 – Don’t Be Afraid of a 20% Down Payment
A down payment is a one-time payment you make to the lender when you purchase a property. The down payment is significant because it represents your initial investment in the home and is often a good indicator of whether you can afford the property you want. Down payments usually range from 5% to 10%, but they could go as high as 20%. This is a problem for many prospective homebuyers because they might be unable to afford it at the time. However, this is also beneficial because there’s less risk involved, meaning you’re in the lender’s good graces.
#5 – Consider the Future
Buying a home is a long term decision. You’ll have to make payments on the mortgage for years, and the property should increase in value, allowing you to profit on the investment. This makes it a worthwhile endeavor!
#6 – Don’t Be Afraid to Ask For Help
Above all else, homebuyers need to understand that there are many different sources of information on the Internet. This information can provide valuable insight to help you make informed decisions. However, you also need to understand that home buying can be confusing, so you should seek help when needed.
For first-time homebuyers, maintaining a positive attitude is one of the keys to success. This will help you stay motivated and persevere through the challenges of buying a home. Of course, you have to go through the process by the book to ensure that you’ll have little to no problems getting closer to your dream home.
If you’re planning to own properties in southern California, Century City Realtors can help you! We have various selections across properties, such as residential, commercial, and industrial, all for affordable prices. Simply go to our website to get started!