Buying a home is among the largest transactions that families enter. There are many important details and tips that can help first-time purchasers before they buy residential real estate.

Preparation

Buyers should budget for three costs. First, a down payment which depends on the mortgage and lender.

Next, buyers must pay closing costs comprised of the fees and expenses needed to finalize the mortgage which typically range from two to five percent of the loan. Move-in costs, immediate home repairs and improvements, and furnishings should be considered

Buyers should calculate on how much they can safely spend on their home. This is based upon income, debt, down payment, credit score and the home’s neighborhood.

Purchasers should also check their credit by obtaining reports from the major credit bureaus and contesting any errors. Bills need to be paid timely and credit card balances should be kept as low as possible. Keep current credit cards open because closing a card may lower your credit score.

Mortgage

The most common mortgages are conventional mortgages which are not guaranteed by the government and may require a three percent down payment, FHA loans with down payments at 3.5 percent, USDA loans for rural buyers which usually have no down payments and VA loans for current and veteran military service members which typically do not require down payments.

Purchasers should compare mortgage rates and fees from multiple lenders. Purchasers may be eligible for first-time home buyer programs offered by local governments that combine low interest mortgages with assistance for down payments and closing cost assistance or tax credits.

Seek a preapproval letter when you begin shopping. Lenders will review your credit and review information to verify income, assets, and debts.

Shopping

Buyers should carefully consider these matters:

  • Choosing a real estate agent who will search for the right home and represent you in the negotiations and closing. Seek referrals from other buyers and obtain references.
  • Selecting the right house and neighborhood. Consider the advantages and disadvantages of condominiums, single family housing or planned communities.
  • Setting a price range within your budget to avoid being house poor.
  • Taking advantage of the availability of the recent popularity of virtual tours to narrow choices. It is still necessary to walk through possible selections.

Purchase

Professional home inspections of the home’s structure and mechanical systems are important to uncover hidden defects. It is important to assure there is testing for radon, mold, and pests. Lenders will also require purchasers to obtain adequate home insurance to cover liability or losses.

An attorney can provide representation at closings. They can also assist with your transaction.