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Buying a new home can be hard in the best of times. Housing today is more expensive, demand from other potential homebuyers is more competitive, and the supply less available than it was just a few short years ago.

Home prices shot up during the pandemic due to record-low mortgage rates and remote work, and now rising mortgage rates are exacerbating the affordability crisis, especially for first-time buyers. But the impact of rapidly rising monthly housing payments is more drastic for buyers searching for an affordable starter home. Many of those people – often first-time homebuyers – are priced out of the housing market entirely because there’s no room to lower their budget. 

But, there is a path to get you there.

10 Tips to Help You on Your Homeownership Journey

1. Start saving early

Here are the main upfront costs to consider when saving for a home:

• Down payment: Use an online down payment calculator to help you set a savings goal then set up automatic transfers from checking to savings every time you deposit a paycheck. 
• Closing costs: These are the fees and expenses you pay to finalize your mortgage, and they typically Range from 2% to 6% of the loan amount.
• Move-in expenses: Remember to budget for Moving costs which typically run up to $2,500 for most local moves.

2. Decide how much home you can afford

Figure out how much you can safely spend on a House before starting to shop. As you prepare to save, start to keep in mind what you can handle for a monthly payment.

3. Check your credit scores

Your credit score will determine whether you qualify for a mortgage and affect the interest rate lenders will offer. Having a higher score will generally get you a lower interest rate. 

4. Explore mortgage options

A variety of mortgages are available with requirements. Here are the main types to consider:

• Conventional mortgages are the most common and are not guaranteed by the government. Some conventional loans targeted at first-time buyers require as little as 3% down.
• FHA loans are insured by the Federal Housing Administration and allow down payments as low as 3.5%.
• USDA loans are guaranteed by the U.S. Department of Agriculture. They are for suburban and rural home buyers and usually require no down payment.
• VA loans are guaranteed by the Department of Veterans Affairs. They are for current military service members and veterans and usually require no down payment.

5. Get a loan preapproval

Having a preapproval letter shows home sellers and real estate agents that you’re a serious buyer and can give you an edge over home shoppers who haven’t taken this step yet.

6. Choose the right real estate agent

A good real estate agent will scour the market for homes that meet your needs and guide you through the negotiation and closing processes. Get agent referrals from other recent home buyers. Interview at least a few agents and request references.

7. Narrow down your ideal type of house and neighborhood

Weigh the pros and cons of different types of homes, given your lifestyle and budget.

8. Make a budget and stick to it

To avoid financial stress down the road, set a price range based on your budget — and then stick to it. A lender may offer to loan you more than you’re comfortable with, or you may fall in love with a house and want to make a stretch. Stick to your budget. 

9. Home inspections matter

A home inspection offers a thorough assessment of the structure and mechanical systems. Professional inspectors look for potential problems, so you can make an informed decision about buying the property.

10. Negotiate with the seller

You may be able to save money by asking the seller to pay for repairs in advance or lower the price to cover the cost of repairs you’ll have to make later. Work with your real estate agent to understand the local market and strategize accordingly.

As always, Canopy’s real estate team members are standing by with information, resources, and advice to share to help you get on the path to home ownership when you’re ready. Interested in learning what you can afford? Talk to a real estate expert by clicking the link below!

Talk to a Home Loan Expert Today!