Top Tips for First Time Buyers

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.

Start saving now

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.

Consider FHA loans

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.

Research the market

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.