Top 5 Tips for First-Time Homebuyers in 2024

Last year 32% of all property purchases were carried out by first-time buyers, rising from 26% in 2022. This paints a positive picture for the market in 2024, and so if you’re among the group of wannabe homeowners but you don’t know how to make this dream a reality, stick around and we’ll load you up with tips on tackling the key processes involved.

Understanding Your Financial Health

You need to get a clear picture of your finances ahead of buying property for the first time. To do this comprehensively:

• Check Your Credit Score: A higher score can get you better mortgage rates.
• Assess Debts and Savings: Know what you owe and what you’ve saved.
• Calculate Affordability: Use online tools to see how much a house fits your budget.

Budgeting is crucial. Ensure you factor in ongoing costs like property taxes, home maintenance, and insurance. Also think beyond the down payment, as closing costs often surprise first-timers. And since data from the National Association of Retailers shows that first-time buyers need a 6% down payment on average, keeping cash back to account for additional budgetary strain is sensible.

Consult with a financial advisor if you’re unsure about any step. They can help align homebuying with long-term goals. And remember, buying within your means ensures less stress when unforeseen expenses pop up later on.

Exploring Mortgage Options

Selecting the right mortgage can be as important as finding the perfect home. You need to understand what fits your financial picture best. Look into:

• Fixed-Rate Mortgages: These offer stable monthly payments.
• Adjustable-Rate Mortgages (ARMs): Rates can change over time, which might work if you plan to sell soon.

Another good way to understand mortgage rates on top of initial research is by comparing different lenders and options. A lower rate saves money over time but might come with higher upfront costs.

Also, think about the loan term. While a 30-year mortgage has lower monthly payments, a 15-year one builds equity faster. Each choice impacts your financial future differently.

Don’t hesitate to ask questions when meeting lenders. The more informed you are, the better decisions you’ll make regarding fees and terms that suit your situation.

Considering these factors ensures you pick a mortgage aligning with both current finances and future plans.

Choosing the Right Neighborhood

Finding the right neighborhood is like choosing the perfect outfit, in that it needs to fit your lifestyle and future plans. In order to achieve this:

• Research Local Amenities: Look for parks, schools, and shopping centers.
• Check Safety Records: Explore crime rates and talk to local residents.
• Evaluate Commute Times: Factor in how long it takes to get to work or school.

Be sure to weigh up both your current needs and what might change down the line. A vibrant nightlife may appeal now but think about future family requirements. Visiting at different times of day gives a true sense of noise levels and activity patterns.

In addition, explore online community forums for firsthand insights from locals. Moreover, get to grips with property value trends in a given neighborhood, as rising values indicate a growing area, while stagnant ones could suggest potential issues.

You can even look into top-ranked neighborhoods nationally, like LA’s Downtown Arts District or Brooklyn’s Fort Greene area if you are flexible about relocating.

Handling Home Inspections and Appraisals

Home inspections and appraisals play a pivotal role in the homebuying process and are a way of checking that you’re making a sound investment. They’re also necessary for securing a mortgage in many cases. To get them out of the way efficiently:

• Hire a Professional Inspector: They identify potential issues like structural damage or outdated systems.
• Schedule Early: Don’t wait until the last minute to arrange inspections.
• Attend the Inspection: Being present lets you ask questions directly.

Inspections reveal underlying problems that might not be visible at first glance. Use this information to negotiate repairs or price adjustments with sellers. Typical costs for this process currently sit at $340, but vary depending on the size of the property. An appraisal, on the other hand, confirms if you’re paying fair market value.

You also need to understand that lenders require an appraisal before approving your mortgage, as mentioned. It’s their way of ensuring the property justifies the loan amount. Review both reports carefully, as knowing exactly what you’re buying protects your financial interests in the long term.

Read more: What is owner financing in real estate?

Making an Offer

Crafting the right offer involves a blend of market knowledge, timing, and negotiation skills. To get this right:

• Research Comparable Sales: Understand recent sales in the area to gauge fair prices.
• Consider Market Conditions: In a seller’s market, be prepared for competition.
• Set Your Limits: Know your maximum price before starting negotiations.

Include contingencies like financing and inspection clauses to protect yourself. While it might seem tempting to go all-in during a bidding war, stay within your budget.

Also, submit an earnest money deposit, as this shows sellers you’re serious without binding you irrevocably. Additionally, be ready for counteroffers, as flexibility can help reach an agreement beneficial for both parties.

Lastly, it’s true that sometimes adding personal touches, like a heartfelt letter about why you love the house, makes your offer stand out amidst others who might only focus on numbers. Don’t let feelings of corniness stand between you and your dream home.

Read more: What is proration in real estate

Final Thoughts

There will inevitably be some hiccups and pain points as you go through with your first property purchase. However, taking these tips to heart and learning from any mistakes you make will soon see you picking up the keys to a house that will soon become your home.

Written by Billy Guteng. August 9, 2024

Billy is a content writer for Kukun. He was born in France, and has lived in multiple cities around the world ever since. He loves art, design and architecture as well as construction and real estate.