If you are looking to get on the housing ladder, you may be fully aware
of how difficult this process can be. Today, there are rising levels of
inflation around the world and an emerging cost of living crisis that has
resulted in a significant reduction in disposable income levels for millions of
people. The average housing price has risen in the last decade, posing real
problems for first-time buyers with no equity. In short, it is recognized that
it can be exceptionally difficult to be in a suitable financial situation that
allows you to buy your first home. Thankfully, a range of hints and tips can
make getting on the property ladder more achievable. This article will discuss
three top tips for first-time buyers in detail.
There is some good news for first-time buyers: the average down payment
for a first home is 7% of the total
price of the property. This is significantly lower than the 12% down
payment, which is an average amount for non-first-time buyers who are looking
to sell their existing property and buy their next home. Consider that a 7%
down payment on a $200,000 first home still equates to a payment of $14,000,
which is still a significant sum of money. In addition, it is worth recognizing
that the larger the down payment you can put on a property, the less your
monthly mortgage repayments will be. It can be far more beneficial to start
saving money for a down payment years before you intend to buy your first
property. Budget month by month and aim to cut back on all but the most
essential purchases. You will find that saving significant sums of money each
month can accumulate over the course of a year to a sizable amount.
For first-time buyers, it may be beneficial to consider looking at FHA loans. These are types
of mortgages that are issued by the Federal Housing Administration (hence FHA)
and typically require a lower down payment to be made on a property than for
other loans. The down payment with an FHA loan is often between 3.5% and 5%,
making it an attractive proposition for first-time buyers who have been unable
to raise a larger deposit. In addition, an FHA loan may be more suitable for
people with a lower credit rating as the threshold for acceptance is set as low
as 580 when it is typically around 620 for a conventional mortgage.
A final top tip for first-time buyers is the importance of thoroughly researching the
housing market. When looking at properties within your price range,
comparing similar-sized homes in the neighborhood or other areas can be hugely
beneficial. After a research period, you can determine if a home is overvalued.
Consider also that the asking price for a property will often be open to
negotiation. Do not be afraid to make a sensible counteroffer and back this
price up with factual evidence of the prices of similar properties with similar
features and nearby amenities. You may be surprised how much you can reduce the
asking price of a property, and if your negotiations are successful, you will
benefit from a lower mortgage amount to pay each month.