What Every First Time Home Buyer Should Know

A home is one of the biggest purchases you can make and if you’re about to venture into the world of real estate as a first time home buyer it can be a bit nerve-racking, to say the least.  What should be an exciting time can often be overshadowed by the multiple steps that are part of the home buying process and the unfamiliar lingo you’ll hear daily before you even turn that key in your new front door. It might sound stressful, and honestly a little scary, but it doesn’t have to be if you educate yourself and find a realtor who will guide you through the entire process.

Since it’s a lot to take in we’ve listed some first-time home buyer tips to get you thinking even before you begin looking at homes with your real estate agent.

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  1. Start saving early

If you can, start saving for your first home sooner rather than later. Saving more money now means having more for a down payment, which in turn lowers your monthly mortgage payment. While most homebuyers aim to put down 20%, it’s not required when buying a home. You will, however, incur PMI (private mortgage insurance), an additional cost added to your monthly mortgage payment.  Down payment calculator is a good way to figure out how much money you’ll need to put down based on various percentages. Just plug in the amount you are looking to spend, the amount of money you have or the percentage you want to put down, and it will calculate the rest for you.

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  1. How much can you afford

It’s important to know just how much you can afford to spend. This will allow your real estate agent to target a certain price range when searching the MLS (Multiple Listing Services) system. A home affordability calculator can help you determine that amount.

  1. Budget for closing costs and additional expenses

Once you know how much you can afford, keep in mind there are additional expenses, such as closing costs which vary state by state. For instance, in NYC you can anticipate closing costs somewhere in the range of 4 to 5% of your loan amount. Each homebuyer’s situation is different so it’s best to talk with a mortgage specialist early on.

Another good idea is to set aside some money for after you move in. You might need to purchase furniture, appliances, or do some work on your new home. As a homeowner, it’s safe to say unexpected expenses will arise when you least expect them.

  1. Check your credit score

Understand the importance of a high credit score; this is a major factor when applying for a mortgage.  It also determines approval, interest rate, and possible terms of the loan. If your score is on the lower side, work on getting it raised. Focus on paying off any outstanding debt(s) and stay away from opening up any new credit accounts or making large purchases. If your credit needs a bit more help, there are companies who can assist, for a fee, in repairing and raising your credit score.

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  1. Explore down payment options

A variety of first-time home buyer programs are available both through federal and state programs. Loans such as Federal Housing Administration (FHA) and Veteran Affairs (VA) loans are available for those who qualify. If you have less than perfect credit, a small amount of money saved, and do not qualify for a conventional mortgage, you might be eligible for the FHA loan. An FHA loan does require mortgage insurance which stays for the life of the loan, unlike a conventional mortgage which can be canceled after your loan is paid down to 80% or more of the appraised value of the home. Educate yourself on the pros and cons of an FHA loan.

A VA loan is available for qualified U.S. veterans, active military personnel, and certain surviving spouses. There are many benefits to this type of loan and one to look into if you meet the requirements.

  1. Pre-Approval

As you start the home buying process, a pre-approval letter will confirm in writing how much a lender is willing to lend you and at what terms. This letter shows both your real estate agent and the seller that you are a serious buyer, and in some cases will give you the upper hand over a potential buyer who has not taken this step. It’s also necessary to have when you’re ready to put in that offer.

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  1. Hire the right buyer’s agent

Now that you have everything in place and you’re ready to buy your home, it’s time to find a highly skilled, and motived agent who is both knowledgeable about the area you are looking to move in to, as well as the home buying process. Here at Madison Estates, we provide both the information and guidance you’ll need when purchasing your home along with saving you time. With access to one of the largest data basis in New York, we not only find you your dream home we will be there to advise you every step of the way.

The Lord of the Residence

Being in NYC, we know finding great housing can be a challenge to say the least. When you finally do find that perfect apartment (in Brooklyn, naturally), you don’t want to ever let it go! You might feel like the king of the (Boerum) hill, but the real lord of this land is the person you pay rent to, and if they are your best bud, you could be home sweet home forever. Here are some tips for fostering a flourishing landlord-tenant relationship.

 

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This should go without saying, but pile the smile! Be friendly, be honest and be reasonable. Wave hi or stop for a quick chat when you see your landlord. Come holiday time, send your landlord a small gift. Report any problems as soon as possible, because small problems can turn into catastrophic ones if ignored. For minor stuff, DIY! Replace the light bulb or batteries in the smoke detector yourself. Be clean and respectful – be the kind of neighbor you would want to live next to, and the kind of tenant you would want to rent to.

 

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How do you behave in the workplace? Are you courteous, efficient, a good communicator? Your relationship with your landlord is an investment, and you should consider your interactions in a professional context. Respect the rules set out in your lease and treat your landlord’s property with care. As with important business interactions, get everything in writing. Try to correspond via email when possible – this will protect both of you and reduce the risk of miscommunication. In the event that something goes wrong, be aware of your rights. There is legislation in place nationwide to protect tenants from discrimination, negligence and other issues that may arise.

 

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Rent Well Spent
A day late really is a dollar short if you get in the habit of paying rent late. Just as a homeowner needs to pay a monthly mortgage, many landlords depend on rental income to fund their mortgages. Late rent is not only disrespectful but can result in late fees, or even eviction. Of course there are legitimate reasons for late rent, and having a positive relationship may mean your landlord is open to negotiation. It is essential to discuss any concerns regarding rent with your landlord ASAP. Always strive to pay your rent on time, if not early!

 

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The Company You Keep
If you have a bad track record with landlords, it might be time to consider a building with a management company. Generally these companies have a good reputation and they require good reviews and positive ratings to stay afloat. Although this means living in a larger complex or building with more tenants, management companies usually have more organized and professional systems in place for maintaining and fixing your apartment. Oftentimes they’ll even give you a checklist when you move-in to make sure everything is satisfactory.