12 Powerful Tips for First Time Home Buyers: Step By Step

first time home buyers
Tips for First Time home buyers

If you are a person who falls into the category of first time home buyers, this article is going to be very helpful for you. Buying a first home is one of the biggest decisions that people all over the world take with the utmost consideration.

Some people buy a dream house by themselves completely and some people hire a broker who would find the best properties based on their preferences and desire. But before you dive into buying your dream home, you should consider some important factors.

These factors may include your budget, the location of your house, down payment, and loan amount, legal and technical of the home, registry, and other processes.

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But before going into the details of powerful tips for first time home buyers, let’s have a look at some other aspects also.

Owning Home vs Rented Home

Taking a home on rent sounds easier than buying a home. It might be depending on factors such as budget, finances, and frequency of movement from the location. Some advantages of renting a house compared to buying one:

  • In the case of a rented house, you have lesser legal paperwork to take care of.
  • You don’t have to pay any home/property tax for a rented home.
  • If your job requires you to travel frequently, taking a place on rent is economical and feasible. Owning a place means that you have an asset that you cannot immediately liquidate. So even if you’re moving away because of work or any other reason, you might not have a buyer for your house immediately.
  • If you take a home on rent, monthly rent is all you have to pay which is lesser than per month’s EMI or loan payments per month in case of buying a home.

But this does not make renting the best option over owning a property. Having your own home has its own advantages. Let’s discuss some important advantages of having your own home.

Advantages of owning a property

If still reading this, it means that you already have the plan to buy a home sooner or later. One of the most common reasons people buy homes is that they require a space that they can call their own.

However, there are so many other reasons why people buy their own house. Here are a few advantages:

1- Emotional Stability

Ownership of your own home provides you with the emotional stability that you own it. There isn’t a lot of speculation about this one. For some of us out there, the whole point of buying our own place is that we want to settle down.

For this, the first tangible step seems to be having your own home. If you will ask a few first time home buyers, then you will definitely notice it.

2- No Uncertainty

Having your home also removes uncertainty from your own mind. Having your own home definitely helps with providing certainty and assurance in life. It assures that you will always have a place to sleep and you cannot be kicked out of your own home.

There is no uncertainty about increased rent or vacating the place without notice from the landlord. And most first time home buyers understand this very well.

3- Zero Compromise

Especially when it comes to renting, it is inevitable that you will have to compromise on some of the amenities or the size. And mostly never worth it compared to the quality of the space.

But if you have your own home, there is no space for compromise and you live in it fully. You select a property that suits you the best.

4- Tax benefits for Home Loan

There are tons of tax benefits for homeowners that you obviously wouldn’t have it on a rented place. Basically, when you are provided with your principal amount for the loan, you also have to pay it back with interest. But since it is a home loan, there are multiple options such as a tax benefit.

On the other hand, if you’re staying at a rented place, you are not gaining anything from your initial deposits that sit with the landlord. HDFC, SBI, and ICICI are some popular names for home loans.

5- Easy Financing

It is no less than a myth that you will have to wait for years to be able to buy a home after you have been working tirelessly till your 40s or 50s. But you can always buy your own home even in your 20s with facilities like home loans, EMI, and other financial facilities. If you have a good credit score, it is easier than a bad score.

6- Buying as an Investment

When you know you’ll be in a city for a long time, it’s a good idea to buy a house to give yourself a sense of belonging and permanence. Something that still makes a house an investment even if you move somewhere else, is you have the option to give it on lease.

Apart from that, you might also get an appreciation for the value of your home because of a rise in price. Purchasing a home means increasing your income over time. Appreciation of your property due to developments nearby can fetch you more money than you paid while buying it.

12 Tips for First Time Home Buyers

Firstly, congratulations on your new home that you will be buying yourself in the near future. Now, before you move forward with this purchase, here are the tips that you should keep in mind for the maximum benefit you can have as a first time home buyer. Like you, these tips might be beneficial for several first time home buyers.

1- Start Saving From Early Age

Buying a property is obviously an expensive affair. There are many ways for you to finance your home, but using money from your savings is very beneficial. If you are buying your home completely on your own without financing, it is amazing.

However, if you take thorough financing, there are three major costs that you incur when you buy a home. First, is the down payment, which you put in as the first advance payment for your home. Closing cost is the expenses on finalizing your mortgage loan amount.

And the major element is processing fees and interest on your loan. And first time home buyers should know it and plan accordingly. You must keep a balance and you should be assured that your life will be smooth after the loan.

2- Buy Your Home on a Budget

It is very obvious but some first time home buyers ignore it. You cannot commit to buying your exact dream home if you do not have enough budget for it. You are buying your own home because of a sense of stability, and ownership, and for making life peaceful.

Thus, you need to have a range in your budget from which you can select a good home within your budget. Once you have that, you can use any online calculator to find out which is the best and most affordable for you.

3- Maintain a High Credit Score

If there is one score in your life that really matters while buying your home, it is your credit score. Your credit score is one of the important factors in getting a home loan. This is the basis of how much interest you’ll be paying on your loan.

If you have a very high credit score, you have a higher chance to get a good home loan deal. There are many ways that you can keep a good credit score and for that, the primary thing is to repay all the loans and card bills on time.

4- Be Sure That You Are Ready to Buy a Home

Buying a home is not a very easy task. Yes if you are earning huge money then it might be an easy task. But for most of us buying our first home is a dream and not very easy. If you taking your home through a home loan,

Taking a loan then it is a huge commitment for the next 15 to 20 years. And for this, you have to be mentally and financially ready for it. You need to plan it properly and should have self-assurance that you can manage it.

5- Pre-Approval

A pre-approval is a document that tells that you are eligible and approved for the particular loan amount to buy a home loan. This is beneficial as you get to know the kind of homes that you can buy within the set range.

And this also helps you make an offer to the broker or the seller that they will also feel confident about as they will know that you are capable of paying for the home.

6- Compare Your Mortgage Rates

If there is anything that needs to be compared, it is the mortgage rates given by different banks and NBFCs. Lenders might offer you different options. But you should always compare it through online and offline both.

There are several things in a home loan, and you should understand them well before final your deals. You should know all the upfront fees, interest rates, and hidden charges if any. Comparison will give you chance to find the best deal for you. I will suggest to first time home buyers that compare it.

7- Real Estate Agent

A good real estate agent will help you to find out a good property of your choice in your suggested location. If you are a first time home buyer, you need to be very careful while choosing a real estate agent. This is the individual who will help you to find properties but if the agent is not right you might get the wrong deal also.

Select an agent who has knowledge of the property, and process and most important the person should be genuine and honest. Many first time home buyers approach real estate agents with the expectation to get a good property in a good location and within budget.

8- Hire an Inspector

Before you buy a home, you should hire a professional. This professional will help you to know the details of the property you are going to buy. If there is any technical or legal problem with the property, you should know it before the finalization of the deal.

If you don’t check the property technically, legality, and other aspects before buying it, you may face a problem later. So, it is better that you do it before purchasing it.

9- Your Needs

Having a list of your needs that you can not compromise in your new home is a good idea. Your motivation for purchasing a home will serve as a guidepost for making important decisions regarding buying a home.

If you want to start investing in real estate, you may have multiple options. First time home buyers should know what are their expectations from buying it. If they are clear about their need, they can take a better decisions.

10- Selection of Location

I understand budget is very important to buy a home, but we should not forget the importance of location. You should consider all those important factors which are going to be the needful or priority for you. Like the distance of your office from your home, the distance of school, market, and other amenities.

The location of your home should be good to see, but it should also be loaded with other requirements. I would suggest to first time home buyers and repeated home buyers, that you should focus on location also.

11- Home Insurance

Before disbursing your home loan, your mortgage company will require you to purchase home insurance. I would say, home insurance should be on the list of all first time home buyers.

Home insurance pays for the cost of repairing, replacing your property, etc if they are damaged as a result of an incident covered in the insurance plan. It also offers insurance coverage in the event that you are held liable for an accident or injury.

12- Negotiations

Negotiations, Yes you should be ready that you are going to negotiate the deal. With the help of negotiation, you can get a better deal and save some amount of money while buying a home for yourself.

If you have a good real estate agent with you it can be easier for you. You can cut costs by requesting the seller to cover the repairs or lower the price considering any existing damages. Your bargaining power will play a huge role.

Conclusion

Being a first time home buyer, you should not have to be stressed. If you have all the tips right here, you can easily land the best home for yourself very economically. Retain your financial condition so that your life quality improves after the purchase.

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Some first time home buyers may be very skilled to negotiate the cost of the home and some may not. But still, everyone should try to get the best. I am sure all first time home buyers are not going to take a home loan but still, most of us go for it.

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