Here's some advice on how to buy your first house

Becoming a homeowner is definitely a milestone for many people. And the more you know about the process, the better deal you will get. Dive into this special guide and make the right choice!

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The process of buying a house is usually really stressful. And the global pandemic isn’t making things any easier. Here are 5 things you should know if you are thinking about buying a house:

1. Get Preapproved For A Mortgage

If you are not sure about how much you can afford, you can always get pre-qualified for a mortgage. This will give you a rough idea of what your budget is. All you need to do is provide some basic financial information to a lender and they will take it from there.

This is an excellent way of knowing where you are standing and what type of home you should be looking for. Once you are ready to start seriously shopping for a home, you need to get a preapproved mortgage loan. For this, you need to submit documentation for the lender to verify your financial history.

A preapproval is usually valid for 60 to 90 days and a home seller might not consider your offer without one.

2. Calculate Your Down Payment

Many home buyers are under the impression that they need to come up with 20% of the value upfront. That is not entirely true. While the bigger your down payment is, the less you need to borrow,  most lenders offer mortgage programs for people with lower income to make much smaller down payments.

Programs like Home Possible will allow buyers to qualify for a mortgage with as little as 3% down.

3. Carefully Review Photos Of Online Listings

Staging is a very popular practice among home sellers to make a home more attractive to buyers. They digitally decorate rooms so you can imagine how furniture would look like, but you need to be careful because they usually use this technique to remove a home’s flaws, change wall colors, or edit out stains in floors or carpets.

A good way of avoiding this is by seeing listings from licensed realtors. If you suspect a photo has been staged and it is not mentioned in the listing or there are no before/after photos, be sure to ask the seller in advance.

4. Determine The Offer Amount

Before you decide how much to offer, you need to gather a lot of information from your real estate agent. 
For example, if you want to make an offer on an apartment in a building you like, you should know, beforehand, how much were the last units sold for, in what condition they were, or what the original listing price was. Besides, you’d also want to compare sizes, style, amenities, etc.

5. Get A Home Inspection

Whenever you make an offer on a home, make sure to add a contingency for a home inspection that costs around $300 and $400, though this might vary depending on the location and the size of the property. This way, you protect yourself from unpleasant surprises.

LET'S TALK ABOUT YOUR BUDGET

Now that you are ready to buy your first house, you have to concentrate on your budget. Let's be real: budgeting homebuying costs isn’t easy. While your down payment is certainly important, it’s not the only thing you’ll be spending on. Bearing that in mind, don’t forget these other costs when planning to buy a home:

1. Earnest Money

Earnest money is a good faith deposit made after your initial offer is accepted. The general rule of thumb for earnest money is 1 percent of the sales price, but some listing agents and sellers may expect between 3 and 5 percent.

2. Appraisal Fee

Before you can be approved for your mortgage, your lender will need a professional appraisal showing how much the home is worth. As the buyer, you’re responsible for paying the appraiser’s fee. 

3. Inspection Fees

Although an inspection is not required, the amount for a standard home inspection and a separate inspection for termites should be on your list of expenses.

4. Closing Costs

While closing costs may come as no surprise, the amount you have to pay can easily be one of the largest unexpected expenses when buying a home. Closing costs are typically around 3 percent of the purchase price.

5. Repairs And Upgrades

One final category of expenses not to forget when buying a home is renovations and repairs. Even if you are buying a new house there may be things to want to change before living in the house, so remember to budget for these expenses too.

See also: "Buying a house: how to master your saving game"

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