5 Tips For First Time Home Buyers 2019
1. Save for Your Down Payment
Bakersfield, CA is a great place to invest in a first home because it’s much more affordable than other cities in the Golden State. Are you a first time home buyer looking to buy a property within Bakersfield, CA or the surrounding area? You’re in luck! At Authentic HomeBuyer, we not only offer cash for unwanted properties, we also recommend tips to first time home buyers so that they can plan smarter, not harder.
Learn How Much You Need to Save
Before you start saving, you should know how much you need to save first. Sit down with a mortgage lender who can tell you how much of a mortgage you qualify for. The general rule of thumb is that your housing expense shouldn’t be more than 28% of your monthly income.
Once you know how much you need to save, start setting aside every extra dollar you can either from work bonuses, tax refunds, gifts, or savings.
The standard down payment for first time home buyers is just 20% of the total home cost. However, if you cannot save that amount, you can always look into first time home buyer programs that will allow you to submit a down payment on a home that’s as low as 3%.
2. Determine Your Timeframe
Let’s say you want to buy a home in the next five years and let’s pretend your first time home costs about $500,000. Take 20% of the total home cost or your down payment ($100,000) and divide that by 5. That means you should try to save about $20,000 a year until you reach year 5.
Naturally, the shorter your timeframe is to buy your first home, the higher your annual savings goal needs to be.
Since saving thousands of dollars a year can be difficult for many American families, especially in Californa which is the second most expensive state to live in the nation, you should separate some room in your budget to ensure that your goal is reasonable. For some folks, that means earning additional income, cutting back on expenses, or a combination of both.
Unless you’re a natural saver, you should streamline your savings procedure by investing in a kind of payroll savings plan. Similar to your 401(k) plan, you can allocate some of your monthly earnings into a savings account dedicated only for your first time home down payment.
3. Check Your Credit Reports
To qualify for a mortgage in 2019, you need great credit and simply knowing your credit score is not enough to pass. You should routinely check your credit reports so that if you come across any issues, you can dispute them early on. To improve your score in preparation for a mortgage, delay opening a new credit account as that temporarily lowers your score as well as pay off as many debts as you can without hurting your savings.
4. Think About The Type of Home You Want
Many first time home buyers shop for single-family homes. However, it doesn’t hurt to look at other home types too. For example, townhouses and condos tend to be smaller but require little to no maintenance. However, before you make an offer on a condo or townhome, always check the HOA cost and the HOA rules, especially if you want to budget a set amount of costs per month and if you have pets or children.
5. Consider Closing Costs And Insurance Fees
Looking at a $235,000 price tag or the average cost of a home in Bakersfield, CA can be intimidating at first. We hate to bring this up but when you buy your first home, you’ll end up paying for more than just the total purchase price.
Closing costs can include property taxes, title insurance, transfer taxes, HOA fees, escrow fee, legal fees, and other expenses. They typically run 2% to 5% of the sale price.
On a home that costs $275,000, closing costs could be as much as $13,000 which is the price of a car in some cases! Remember to set aside as much extra money for these additional costs as you can and always plan in advance.