How to Overcome Three Common Obstacles as a First-time Home Buyer
The process of purchasing your first home brings excitement and anticipation into your life. It is a time when new beginnings are within reach; your dream home is only a few short steps away from being yours! However, there are some obstacles that first-time home buyers may encounter, so it is important that you are prepared should the time come. Make your first purchase a simple process with this guide on 3 obstacles that you may face, and how to overcome them.
Higher Interest Rates
As a first-time home buyer, you may not have as much credit built up as someone who is purchasing a second home. This means you are seen as a liability to lenders, which increases your interest rates, making your payments more per month. Luckily, there is a way to ensure that you get the best rate possible. Speaking directly with your lender about finding the best rate is the most effective way to secure a mortgage that you can afford. You may also want to build up your credit a little more before purchasing, so that your lender can see that you are responsible and can make payments on time. Overall, getting the best rate is possible if you openly communicate and ensure that you have at least a small credit history beforehand.
Saving the Down Payment
According to Forbes Magazine, most first-time home buyers struggle to bring together enough money for a down payment. In fact, 55% of people surveyed considered the down payment to be the biggest obstacle in purchasing their first home. There are, however, clever ways to ensure that when the time comes for you to start thinking about buying, you have already saved enough to cover the amount required. If you are considering buying in the near future, start saving now! Take a certain percentage of each pay cheque and set it aside. This will secure the funds for you, and help you on your way to saving for the down payment in advance. Another method to help you save is to reassess your daily spending, and redirect funds towards your savings. If you are purchasing coffee every day, reassess and put that money towards your down payment instead. It may seem like a small amount but over time it will add up and help you get one step closer to home ownership!
For first-time home buyers, the whole process can seem like a complete mystery; which, in turn, can prevent you from entering the housing market. Luckily, if you do some digging, this obstacle can be an easy one to overcome! Instead of letting your fear of the unknown keep you away from purchasing your first home, take these simple steps to make sure you are informed, and can happily move towards owning your first home:
- Do your research ahead of time: Whether it is figuring out how much you will need for a down payment, finding the right lender for your needs, or just figuring out what steps are involved in purchasing a home, doing your research ahead of time will help keep you from feeling lost in the process.
- Ask questions: If you are ever feeling confused, overwhelmed, or simply need clarification on something, never be afraid to ask questions! The right realtor should have the answers to most of your property questions, and a good lender will be able to explain the mortgage terms to you in plain English. Overall, asking questions will ensure that you are informed enough to feel comfortable moving forward.
- Plan ahead: With all your research done and your questions asked, plan ahead to make sure that you stay on top of everything that’s going to happen. Creating a financial goal (as stated above), keeping track of your buying timetable, or preparing your documentation ahead of schedule will ensure that when the time comes, you will be ready to purchase your new home without undue stress!
Whether it is the fear of the unknown, or trouble saving for a down payment, there are many obstacles that first-time home buyers face. Luckily, with careful planning and informed decisions, you can overcome these obstacles and make home ownership a reality for yourself! For more information on overcoming home buying obstacles, visit the Caliber Homes Blog.