10 Things You Didn’t Know About Buying a Home

Thinking about buying your first home but unsure what to expect? These lesser-known tips and tricks can help you feel more emotionally and financially prepared for what lies ahead. 

1-You don’t always need a 20% down payment. 

Many first-time buyers still believe they need to put down 20% of the home’s value to qualify for a home loan. But the minimum requirement for a conventional mortgage – the kind that isn’t backed by the federal government – only requires as little as 3% down for qualified buyers. 

And that’s not the only option. Most government-backed loan programs allow for low or zero down payments for eligible buyers. Meet with a lender early in the process to understand what loan types you qualify for and how much home you can afford. 

2-You might qualify for down payment assistance. 

Whether you’re aiming for a down payment of 3% or 20%, the amount of money can be difficult to imagine – let alone save. Luckily, many state and local programs offer down payment assistance to first-time homebuyers. These programs may have income limits, residency and occupancy requirements, and other criteria, but they’re worth a look. They could save you thousands if you qualify. 

3-Your monthly payment includes more than your mortgage. 

You probably expect your mortgage payment to cover the amount you borrowed and the interest. However, it may also include property taxes and home insurance premiums. Lenders often collect these payments in an escrow account and pay them on your behalf. 

That’s important to know because taxes and insurance costs can increase over time. So, even with a fixed-rate mortgage, your monthly payment could still go up. A mortgage calculator that factors in these costs can give you a better estimate of your monthly payment. 

4-Closing costs can catch you off guard. 

Closing costs are sometimes a surprise for homebuyers. These fees are due the day you sign the final papers and include costs like: 

• Lender fees 
• Title insurance 
• Appraisal fee 
• Escrow fee 

The additional 2%-5% of the home purchase price that closing costs may add to your total can come as a shock. One way to prepare is to ask your lender for a loan estimate after you apply for a mortgage. This document outlines the costs associated with your mortgage offer, giving you a clear picture of the total financial commitment. 

5-Home inspections are optional but critical. 

Buying a home without an inspection is like driving a used car off the lot without checking the engine: You’re trusting everything works without any proof. Wear and tear take a toll on all houses. Without an inspection, you don’t know what that toll is or how much it might cost you once you’re in charge of repairs. 

6-The neighborhood matters as much as the house. 

Imagine buying a house surrounded by neighbors who host noisy parties every week. Or in an area that adds to your commute and has a homeowners’ association with strict rules. The perfect house in the wrong neighborhood can quickly lose its appeal, so be sure to consider the location before you put in an offer. Try visiting the neighborhood at different times of day, talking to neighbors, and researching school zones, crime rates, and future development plans. 

7-The listing price isn’t what you’ll pay. 

The listing price tells you what the home is worth in the eyes of the seller and their agent, but it’s just a starting point. The true market value becomes clearer once buyers start making offers. Ultimately, what you pay depends on the market. A slower market may give you more room to negotiate. In a competitive market, you might have to offer more. Knowing this upfront can help you manage expectations and stay grounded during negotiations. 

8-There are ways to compete without overbidding. 

You may find yourself competing with other buyers. Being flexible about your closing date, limiting contingencies, or covering some of the seller’s fees can make your offer stand out, even if it’s not the highest bid. 

9-Maintenance is part of the deal. 

Ask any homeowner about their to-do list, and you’ll quickly realize that household chores are never really done. Some of the most important items on that list? Routine maintenance. 

While cleaning gutters and changing air filters may seem unimportant, these and other routine tasks protect your home’s value and prevent bigger repair bills later. Consider setting aside 1%–3% of your home’s value annually for upkeep and start a maintenance calendar to stay on top of recurring tasks. 

10-Your first home doesn’t have to be your forever home. 

First-time buyers sometimes feel pressured to find “the one.” But unless you have unlimited funds, you’re going to have some tradeoffs when house hunting. Your first home can be a stepping stone. Focus on what you need for the next three to five years, and choose a place that fits your current lifestyle and budget – even if it’s not your dream home yet. Remember that your needs – and dreams – might change and grow. Wherever the path leads, you’ll be well-equipped for the homebuying process. 

Sources 

 https://www.consumerfinance.gov/owning-a-home/explore/understand-the-different-kinds-of-loans-available/  

 https://yourhome.fanniemae.com/own/how-build-your-maintenance-and-repair-budget 

Contact Information:
Name: Sonakshi Murze
Email: [email protected]
Job Title: Manager