Common Questions for First-Time Homebuyers

A lot of time and effort goes into buying a home. Especially for first-time buyers, the series of important decisions could get stressful. We have provided a list of six common topics first-time homebuyers might want to know. 

1. What should I do first?

The very first step in buying a home is organizing your finances. You'll have to apply for a mortgage before you can sign for the house, and there is a decent amount of paperwork involved. 

They'll ask questions like what is your debt to income ratio (DTI), which measures your capacity to afford another loan. They'll also ask for proof of income through a pay statement or W-2. This takes longer to collect for some than others. You might already have an idea of how much you can afford to pay monthly. If that's the case, you're ready to move on to the house hunting phase. 

If you have all of this paperwork ready, we suggest getting pre-approved for a loan. Having pre-approval gives you a sense of security and confidence in knowing you're prepared to buy a home. It also gives you an advantage should someone else make an offer that isn't approved yet. Check out to speak to a mortgage lender about getting pre-approved for a mortgage. 

2. How will I know when I'm ready to buy a home? 

If you're financially ready, then only you can decide when you're emotionally prepared. Of course, it's a huge purchase and a long-term responsibility. Once you're comfortable with the monthly expenses, you have to decide if you can see yourself in a single-family home. 

When you own a property, you can personalize to fit exactly what you want. Ready for a big industrial kitchen or paint all the walls a particular color? Then you're probably ready to buy your own home. Landlords don't want you to personalize their property because they'll likely have to rent it out to someone else eventually. If you own the house, you don't have to jump through unnecessary hoops to feel comfortable at home because you're your own landlord!

3. Should I buy a foreclosed home? 

We wouldn't suggest buying a foreclosed house if it's your first home. However, it could be an excellent investment if you're willing to put in the work. A foreclosed home has likely been neglected, and it might require a facelift. If you can renovate and update the house to be more attractive, you could re-sell the home and make some serious profit. 

If you're not interested in flipping a property, then you'll be able to update the home to fit everything you've desired from a home. Since it's so cheap, you can use the extra money in your budget to make all the changes you want. Of course, you'll have to be experienced with renovating homes or willing to learn. Either way, it could end up being a fun activity. Just be aware of the amount of work you could be getting yourself into. 

4. Should I buy a fixer-upper? 

The same idea applies here, as we mentioned in the foreclosed home section. Be ready to put in a lot of hours making your home perfect. Remember, you'll be living in this house while you're making renovations. If you want a home where you can relax and host company right away, you might consider getting a move-in ready home. Otherwise, buying a fixer-upper could be an excellent investment. Just be sure it fits your circumstances. 

5. How will buying a home affect my taxes? 

Most people can get a tax credit from the interest they pay on their mortgage. You can also get other tax perks for owning a home. For example, if you switch to more energy-efficient electricity, you can use it as a write-off. Also, sometimes you can deduct Private Mortgage Insurance (PMI) from your taxes if it's included in your mortgage. Some areas allow tax deductions if you pay property taxes as well. 

6. What kind of insurance will I need? 

We hear a lot of questions about the right insurance for homeowners. Ultimately, there are two types that we recommend every homeowner get well buying a home. 

  • Title Insurance
    Title insurance protects the buyer from any complications or mistakes during the title transaction. If there are any legal issues, title insurance will help offset any attorney expenses. You can visit our post about title insurance for detailed information about how to get title insurance and what it covers
  • Hazard Insurance
    Another essential type of insurance for homeowners is hazard insurance. Hazard insurance is usually included in homeowner's insurance, which most lenders require. Make sure your homeowner's insurance provides hazard insurance and purchase it well before you move into your home. 

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