The following is a guest blog from TedKnowsMoney.com. Ted’s blog site shares money tips and helps people take control of their finances. He is a professional financial counselor and coach with an MBA in Finance that specializes in helping you afford the life you want to live. Photo Credit: Pexels
Thinking about buying a new home? If so, you should know that there’s a lot to consider. Many different questions and concerns can come into play when you are trying to figure out what your perfect first home should look like. Homebuyers — first-time homebuyers in particular — need to consider a number of different things, from determining how much you can realistically afford to applying for financing. But you can keep your home buying process from becoming overwhelming by answering a few key questions.
If you’re in the market to buy your first home, connect with an experienced agent from The Home Sweet Des Moines Team today! Call Nora at 515.783.9815
Should You Buy or Build a Home?
If you’re having a difficult time finding a home that fits your needs and you’re beginning to feel frustrated with the search, you may want to consider building your new home instead of buying one. Several factors can influence how much you’ll spend, including the number of levels, excavation costs and difficulties, design elements, shapes, and the size of your home. You should also keep in mind that these figures don’t include buying your land.
As you can see, building your own home can take more time and effort than purchasing a pre-built home, so if time is of the essence, you may want to factor this into your decision.
What Are Your Budgeting and Finance Plans?
Deciding your ideal price range will also factor into your decision to buy or build, so write out a budget first to see what you can really afford. As part of this process, you will also need to know your current credit score, which will determine your interest rate, which affects your payment amount. Your credit can also impact how much of a down payment you need to purchase a new home, as well as what sort of lending options may be available for your home purchase.
If this is your first home, and you plan to buy an existing property, you may be eligible for FHA options that make buying a home more comfortable. FHA loans are geared toward first-time homeowners who may not have enough credit history to be approved for other types of home loans. If you plan to build your home, know that loans for custom homes can vary from traditional mortgages.
Getting a Great Interest Rate
It’s true that interest rates remain low, which makes now a better time to borrow a home. But just because you see a rate advertised for 3.217% doesn’t mean that’s what you’ll get. In a perfect world, you have stellar credit that makes you an ideal borrower and fetches you that 3.217% rate. However, it doesn’t work that way for everyone. If your credit score is hurting, you’re more likely to see a higher rate since a lender will see you as a higher risk.
If your lender offers a rate that’s higher than what you hoped for, you always have the option to “buy down the rate,” which equates to paying the lender a fee at closing to secure a better rate. A mortgage point is the equivalent of an eighth or quarter of a percent. So if you’re offered a rate of 3.25%, buying a point could possibly yield an interest rate of 3%. While this looks great on paper, you’ll need to weigh the pros and cons to see if it’s a cost-effective choice. You can add your figures to a points calculator to help you compare to determine which option will benefit you most in the long run.
How Will You Handle Offers and Negotiations?
New home buyers may be surprised that there can be much more to securing a new home or a new tract of land than simply buying that property. Making an offer is typically one of the first steps in any real estate transaction, so it’s crucial that you understand how this process works and how it can help your offer get accepted by sellers. Offers are made in writing to the seller or the seller’s agent and should include a few key elements, such as your starting price and any other details that may help the sellers make their decision.
In the booming real estate market, you also need to understand that bidding wars can be quite common, and you need to be prepared to handle these situations no matter the outcome. Losing out on your dream home can be very disappointing, which is also why it can be wise to shop around for multiple homes before you make your first offer. If you want to save yourself the hassle of handling these details, you should start your search by working with an expert real estate agent from The Home Sweet Des Moines Team.
Whether you are buying or building your first home, the process can be quite tedious. That’s why your safest bet for a smooth transaction is to work with a local agent who can handle all of those tiny details. Good luck with your search for the perfect new home!