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Last year's real estate market with rising mortgage rates made home ownership difficult for first-time buyers. As we head into 2023, our real estate agents have some tips for first-time buyers to make getting into a new home much easier. If you're planning to buy a home this year, pay close attention to these 6 valuable tips that will ensure success.
Maintain Good Credit
If you're planning to look for Southport homes for sale, it's not the time to apply for a new credit card, line of credit, or personal loan. When you apply for a mortgage loan, the first thing lenders do is pull your credit report to check your credit score, payment history, late payments, and debt-to-income ratio. Any applications for new credit can have a negative impact on your loan approval. This is the time to pay your bills on time and avoid adding any more debt.
Get Pre-Approved for a Loan
When you're an excited first-time home buyer, it's tempting to jump right into house hunting to look for your dream home. However, getting pre-approved for a mortgage loan can speed up the process by helping you find a home within your budget and creating stronger offers to sellers. When you're pre-approved, the lender will send you an official letter that states you're qualified loan amount based on your income and credit score.
Be Prepared for Long-Term Mortgage Payments
Buying a new home is exciting, but it's also a big step for first-time buyers. A home mortgage loan comes with a loan term of up to 30 years which requires a major financial commitment. Before you jump into buying a home, make sure you can afford long-term mortgage payments and the costs of home upkeep and repairs. Be prepared with a stable income, money in a savings account, and a 3 - 6 month emergency fund to cover household expenses.
Be Prepared for Upfront Closing Costs
Buying a new home includes a variety of closing costs unless you're planning to pay cash. Your lender will collect closing costs which are upfront expenses for loan services provided. These closing costs usually include attorney fees, appraisal fees, escrow fees, home inspection costs, title insurance, homeowners insurance, and property taxes. First-time buyers should be prepared to pay closing costs that can add up to 5% of the total loan amount.
Investigate the Housing Market
Before you make a serious offer on a home, it's important to investigate the housing market in that area. You can look at online listings or drive through the neighborhood to see how many homes are on the market for sale. If there are numerous for-sale signs, sellers may be more willing to negotiate with pre-approved buyers by lowering the sale price, paying some of the closing costs, or offering other incentives.
Check Out Discounts for First-time Buyers
The average down payment to buy a home is 20% of the sale price unless you're a first-time home buyer. There are government and state programs that offer cash grants, down payment assistance, mortgage rate discounts, and tax credits to help first-time buyers get into a new home. Before you make an offer, check into various programs that can make home ownership much more affordable for first-time buyers, even buyers with lower income or less-than-perfect credit.
Are you thinking about a move to the Southport area? Contact us so we can help you find your first home in a lovely Southport neighborhood that fits your lifestyle and finances.