First Time Home Buyers Tips in Montgomery County, PA
Being first time home buyers is very exciting, but it can also be quite overwhelming at the same time. After all, buying a home is likely the largest financial investment you will ever make in your life, so you want to make sure you get it right.
If you’re planning to buy your first home in the suburbs of the great city of Philadelphia, consider the following first time home buyers tips to make sure the transaction is a smooth and successful one.
Start Saving For a Down Payment Right Away
Depending on how expensive the home is that you are planning to purchase, the down payment amount can be pretty hefty. If you are going to apply for a conventional mortgage, you’ll need to come up with at least 5% of the purchase price of the home. That means a home purchase of $300,000 will require a minimum down payment of $15,000, for example.
If you want to skip the private mortgage insurance (PMI) premium, you’ll need to come up with a 20% down payment, That means that same home purchase would require $60,000 down.
Please keep in mind that there are mortgage programs that allow you to purchase with very little down money or no down money. This depends on your income level and the area where you would like to purchase. Contact one of the qualified Realtors at The Barndt Agency that can set you up with a lender to discuss the different options.
Considering how long it can take to save up so much money, you’re best bet would be to start saving as early as possible.
Get Pre-Approved For a Mortgage
Before you start house hunting, consider getting pre-approved for a mortgage first. While this won’t necessarily guarantee that you will be able to get final mortgage approval after finding a home to buy, it will help you understand exactly how much you can afford in a home purchase. That way you can focus only on properties that fall within your price range.
Further, a pre-approval letter will make you more competitive if the market is saturated with buyers. Sellers will look more favorably on you with a pre-approval letter in hand.
Hire the Right PA Real Estate Agent
Not only will you want to hire a real estate agent who is experienced, you also want to work with someone who is well-versed in the neighborhood you’re looking in and the type of property you want.
Having plenty of experience and knowledge of the local market and the properties within it will help make the house hunting process much more streamlined. It will also help you draft up a competitive offer that can help you get the home you want at a great price.
Don’t Skip Important Contingencies
When you finally find the home of your dreams, it’s time to put in an offer. But many first time home buyers may be so excited and eager to get their hands on the property that they may choose to forego contingencies. However, that’s not usually recommended.
Certain contingencies are extremely important to include in a real estate contract and are meant to protect the buyer. Two important contingencies in particular that first time home buyers should always include are financing and home inspection contingencies.
A financing contingency provides buyers with the chance to secure a mortgage before closing on the deal. If the buyer is unable to secure financing, this contingency gives them the right to walk away from the deal.
A home inspection contingency gives buyers the chance to have the home inspected by a professional to see if there are any issues that would compromise the deal. If the buyer finds out about any major issues that they’re not comfortable with, they’re free to back out of the deal if a home inspection contingency was included.
Budget For Closing Costs
The actual mortgage that you have to start paying is not the only expense associated with buying a home. There are also a number of closing costs that you will have to budget for when the deal closes on your new home. If you don’t set aside enough funds to cover such costs you could find yourself in a little bit of a pickle.
Generally speaking, closing costs run anywhere between 2% and 5% of the mortgage loan amount and include things such as appraisal fees, assignment fees, homeowners insurance, title searches, real estate commissions, and so forth. It’s important to calculate the anticipated closing costs before you buy a home to help you set your budget accordingly and be prepared.
Final Thoughts for Buying Your First Home
Since the purchase of a home is a big financial deal, it’s best that you go in it completely prepared. Before you start your search for a new home, get in touch with a mortgage broker and real estate agent to help successfully guide you along the path to homeownership.
If you are thinking about buying a home give us a call, 215-234-8041. We will be happy to explain the process and set expectations for what will happen as you get started.