26 Mar Buying Your First Home This Year? Five Important Things That Are Sure To Make The Process Easier
Buying Your First Home This Year? Five Important Things That Are Sure To Make The Process Easier
Maybe you’re tired of dealing with the hassle of finding roommates and signing a new lease year after year. Or, perhaps you’re ready to put down some roots and start a family. Whatever your reason for taking steps towards homeownership this year, don’t be surprised if you have to muscle your way into crowded open houses or find yourself engaged in an extreme bidding war when you find the home you really want.
While plenty of us will continue to write monthly rent checks or live at home in 2018, just as many will decide that this is the year they want to enter the real estate market and invest in their own place. In fact, according to a recent study by the National Association of Realtors (NARS), millennials were the largest group of homebuyers for the fourth year in a row and 66% of these young buyers were purchasing a house or condo for the very first time.
Clearly, millennials – now the largest generational cohort in the United States – are not just starting to embrace the idea of homeownership, but are actually rapidly inundating the real estate marketplace.
However, just because “everyone is doing it” doesn’t mean that buying a home is an easy task that you can go into halfheartedly. It will truly be one of the major milestones in your life – and not just the very first time you buy, but each time you decide to purchase a new home – whether it’s because you are growing your family and need more space, looking for a coastal vacation home to call your own or perhaps just looking to downsize.
Having worked with many homebuyers of all ages over the years, HUB International understands that prospective homeowners can often get scared off by the highly uncertain and overwhelming buying process, especially if they don’t have a trusted and knowledgeable advisor to turn to for guidance. We’re sure you have a ton of questions like:
- What if I fall in love with a house that I can’t afford?
- If I take out a 30-year mortgage, do I have to live there for 30 years? What if I have to move for work?
- My parents are adamant that I have to put 20% down, but is that really the case?
- Why do I need home insurance, what does it cover and how much is it going to cost me?
- And, most important, who can I turn to and trust for advice?
Even though you might not have all the answers yet, if buying a home is something you think you really want to do, we don’t think you should let the fear of the unknown stop you from at least exploring your options.
That’s why our team of experienced insurance professionals put together a list of five essential things that every new (and veteran) homebuyer should know to make the homebuying process much more manageable and a lot less intimidating. Our hope is that these tips will increase your confidence and homebuying know-how so you can enter the world of real estate prepared and excited.
Homebuyers Tip #1: It’s Worth It to Do Some Homework on Low-Down-Payment Mortgage Options
One of the biggest roadblocks to homeownership today is scrounging up enough money for a down payment – or so you may have thought. This may come as a shock, but according to themortgagereports.com, the average down payment for first-time homebuyers today is just 6% of the purchase price. However, there are a number of programs out there that require half of that, or about 3%.
In addition, most first-time homebuyers can qualify for a mortgage through the FHA (Federal Housing Administration). This particular loan program allows down-payments of 3.5% for applicants, even those with less-than-perfect credit. Another popular loan option for Massachusetts buyers is available through MassHousing and, just like FHA, this program offers qualified applicants low-down-payment loan options. MassHousing accepts as little as 3% down on a 30-year mortgage.
For more information on eligibility, interest rates and loan terms, we recommend you start the homebuying conversation with a professional loan officer. If you are looking for a referral, don’t hesitate to tap into your HUB International agent for a recommendation to the area’s most reputable lenders.
With plenty of low-down-payment loan options to consider, you no longer have to worry about saving tens of thousands of dollars before you start your house hunt. And, since you now know you don’t need to have an exorbitant sum of cash ready and available for a down payment, you could kick off your home search a lot sooner than you may have originally thought!
Homebuyers Tip #2: It’s Always a Good Idea to Hire a Realtor
In today’s DIY world, the concept of having to rely on another human being – like a real estate agent – for help in your home or condo search may seem like a real nuisance, but just hear us out. Sure, with third-party sites like Zillow, Trulia and Redfin, you can certainly schedule private house tours or attend an open house on your own; however, working with an experienced real estate agent will open the door (literally!) to additional opportunities and priceless advice allowing you to better position yourself in this uber-competitive real estate market.
Finding your dream home in the perfect neighborhood and for the right price is no small feat. Now, envision yourself trying to accomplish all this while working full-time, keeping your relationships with family and friends going, and doing all your daily and weekly errands, not to mention staying on top of your favorite Netflix series. Not a pretty picture, is it? To be honest, it’s overwhelming to even think about.
Our suggestion is to let a seasoned real estate veteran guide you through the process. Let them do the time-consuming home searches, scheduling of tours, and price negotiations. In addition, a professional realtor often has insider information on homes that are not listed yet, and might be able to get you in to see a prime property before it’s even on the market. This is critical access to have because, when it comes to buying a home, timing really is everything. Most sellers will gladly take a good off-the-market offer, rather than go through the hassle of opening up their house to hundreds of potential buyers.
Homebuyers Tip #3: Be Hawkish About Your Credit
If you are in your 20s or 30s, the odds are that you have some student loan debt – 29 million of us millennials do! But, don’t worry, the fact that you owe money may actually work to your benefit when it comes to one of the keys of homebuying – the all-important credit score.
Thanks to your student loan debt, you’ve already established a credit profile, and, if you’ve remained timely with your payments since college, your debt may have boosted your credit score and likely increased your eligibility for lower interest rates when it comes to financing a home.
Another notable reason to keep your credit score pristine is that it may positively affect how much your home insurance policy costs. (See more on home insurance below.)
By taking advantage of services like FreeCreditScore.com, you can closely monitor your credit score, get credit alerts when fraud or identity theft may have occurred, and have access to information about ways to best manage debt and keep credit scores high.
Homebuyers Tip #4: Win A Bidding War by Wowing the Current Owner with a Personal Touch
You’ve found your dream home, but so have five other potential buyers. How are you going to get your offer accepted without going way over budget? If you are not comfortable idly standing by, consider crafting a personal letter to the seller that lets them know all the things that you love about their house.
In addition, you may want to dial up your efforts to win them over by sharing some things about yourself that will make them feel like they know you (and your family and even your rescue pup, Charlie).
You might be thinking, “isn’t it just about the highest offer?” Well, that’s certainly going to be a significant factor in any seller’s decision, money doesn’t always speak the loudest. Selling a home is no easy feat either, and can often be emotional for the current owner especially if they are leaving a home that is full of family memories. You might have a leg up on the competition, especially in a multiple offer situation, if the current owner feels confident that you are the right person to continue caring for their cherished house or condo.
Homebuyers Tip #5: It’s Smart to Keep Your Insurance Agent in The Loop From The Start
Many homebuyers wait until the last second to get in touch with an insurance agent, which can lead to possible financing delays, higher insurance rates and unnecessary stress. Between the extensive home search, putting in countless offers and starting the lengthy mortgage process, purchasing a home insurance policy is often overlooked because of all the other moving pieces.
When you take out a mortgage to buy a home, the lender requires you to purchase an insurance policy. This is to protect what is now not just your investment, but theirs as well. However, many homebuyers, especially first-timers, leave this critical step to the last minute because, more often than not, they don’t realize this is their responsibility to initiate.
So, we encourage you to start the conversation with your agent today. HUB International would love to hear from you – even if it’s just to let us know that you are beginning the homebuying search – because boy, is that exciting! That way, we can not only make sure that insurance is the easiest part of the entire buying process, but also support you every step of the way. Our team of personal insurance agents have some great homebuying tips to share as well as priceless advice on all things home insurance including how things like replacement cost, location, purchase price, and credit score can affect your policy.
In addition to a streamlined and simple insurance shopping experience, HUB International might also be able to save you some serious cash on your policy, helping you stretch your homebuying dollar just a little bit further. We’ll show you all the discounts you will now be eligible for as a homeowner, like bundling your home and auto insurance policy with one insurance carrier, which can save you as much as 30% on your premiums!
ICNE, A Homebuyer’s Secret Weapon
When it comes to buying a home, we know one blog can’t possibly cover all of the questions you have, so should you have any additional uncertainties or concerns, our team of personal insurance agents are here to help you every step of the way.
While much of the homebuying process can be tenuous, purchasing insurance should be the easy part. With our modern, streamlined process and access to the best insurance solutions, HUB International will make sure that it is.