5 Lesser Known Tips for First-Time Home Buyers in Harford County

Buying your first home is an exciting adventure, a brand-new chapter in your life. But it can also be the source of not a little stress and anxiety – it’s likely the largest purchase of your life, and any number of things can go wrong. So as a first-time home buyer, you don’t want to rush, and there are a few things you need to know. Read on, then, for 5 lesser-known tips for first-time home buyers in [market-city].

1. Assess Your Debt Honestly

One of the first things first-time home buyers should do is to take a clear-eyed and honest look at their debt. Mortgage lenders, after all, want to be sure that you can make your monthly mortgage payments. And you, too, should make certain you can handle the mortgage payments on top of your existing debt.

A good rule of thumb to follow here is that your total monthly debt including the mortgage payment should not exceed 36% of your monthly gross income. Most lenders will require that your debt-to-income (DTI) ratio be no more than 43%. It’s imperative, then, that first-time home buyers get their existing debt under control before applying for a mortgage and house hunting.

Some sources of debt you should pay particular attention to are . . . 

  • Credit cards – Experts recommend paying down credit card balances so that you are using no more than 30% of your available credit.
  • Installment loans – Try to pay off or pay down any installment loans such as car loans you may have.
  • Student loans – These are more difficult to pay down, but you may be able to refinance in order to have a smaller monthly payment.

The bottom line is that the more debt you can pay off, the larger mortgage you can qualify for and the less stress you’ll have each month when you have to make the mortgage payment.

2. Save for the Down Payment AND Closing Costs

First-time home buyers in Harford County should save for both the down payment and closing costs. Closing costs often get overlooked here, and that’s a mistake.

The formerly standard 20% down is out of reach for most first-time home buyers, but you should try to pay as much down as possible. You will have lower monthly payments, and you’ll pay less over the life of the mortgage loan.

And then there are closing costs. Typically, closing costs amount to 2% to 7% of the home’s purchase price. So if you pay $300,000 for a home and your closing costs are 3%, you will have to pay $9,000 in closing costs to finalize the transaction. That’s a good bit of money, so being saving now.

3. Get Pre-Approved

Home buyers of any stripe should be pre-approved for a mortgage before they being house hunting. Pre-approval offers several benefits to buyers, and here are a couple of the most important . . . 

First, you’ll know exactly how much you can borrow and, consequently, how much home you can afford. This knowledge can save a ton of time and effort when you’re house hunting because you’ll know exactly what your price range is.

In addition, pre-approval will allow you to be perceived as a serious buyer by sellers. In fact, some seller’s agents will not entertain an offer from a buyer who has not been pre-approved.

4. Determine Where You Want to Live

A common mistake first-time home buyers make involves considering the home only and not the area/location. When you buy a house, you are also buying into a neighborhood, the area where you’ll live for many years. Yes, you need to carefully select a home, but you also need to research neighborhoods.

Some of the neighborhood features to consider are . . . 

  • Neighborhood personality
  • Lifestyle suitability
  • Quality of Schools
  • Walkability
  • Proximity of amenities
  • Crime rate
  • Property taxes

Be sure to consult a local agent at 443-616-5486 to find out exactly what individual neighborhoods are like.

5. Work With a Harford County Agent

First-time home buyers should also almost always work with an experienced Harford County agent. An experienced agent will know the area where you want to buy, the local market conditions, and what you should offer. Your agent will also help you negotiate a better deal. First-time buyers are often at a disadvantage experience-wise, so contact us today at 443-616-5486 when you’re ready to buy.

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