Considering buying your first home in the Reno-Sparks, NV area? Homeownership is an exciting and scary transition, and with so many financial opportunities dependent on your first property, the process of buying a home daunts many.
Lucky for you, Northern Nevada is a fantastic place to move. With many up-and-coming neighborhoods, friendly communities, and growing economic opportunities, the Biggest Little City in America provides a lot of opportunities for first-time homeowners – provided they play their cards right.
If you’re not sure where to start in the home buying process, I’m here to help. Take a look at these 10 tips that I tell all of my clients to consider, especially if they’re first-time buyers.
1. Save Extra
The biggest mistake you can make as a new homebuyer is not having enough cash. You might find that the house you need or want isn’t within your budget or that the homebuying process is more costly than anticipated. Having enough for your down payment is important in the home buying process!
Play the numbers game cautiously, and expect to pay more than you’re budgeting for. Even if you plan perfectly, your house can end up costing you more than anticipated.
2. Plan For Home Closing Costs
On top of saving extra for the homebuying process, factor in the closing costs before taking the next steps on a property. Closing costs refer to the expenses associated with closing on a home loan, including title searches, home inspections, and homeowner’s insurance.
You can expect closing costs to range between 2-5% of the total loan cost. Although you might be able to have the current property owners pay for your closing costs, play it safe, and don’t expect to win that battle in negotiations. Plan to pay up to 5% of those closing fees as part of your budgeting.
3. Pay A Larger Home Downpayment
Mortgage lenders used to require homebuyers to place a minimum 20% downpayment on a property. While 20% is still the conventional rule, some mortgage lenders will let you get away with a down payment as low as 3%.
However, especially for first-time buyers, a lower down payment can be a financial mistake. Lower down payments result in steeper mortgage payments, as well as potentially steeper rates. Finally, more money will be going towards interest rather than your property, so a low downpayment means you end up growing wealth at a much slower pace. Ideally, stick to what’s conventional, and plan for 20% – pay even more if you can.
4. Negotiate
Here’s a little secret: many home sellers don’t expect the homebuyer to meet their selling conditions right off the bat. And why would they? Buying a house is a big decision, and potential buyers will likely submit offers based on their personal finances.
Whether we are in a buyer’s market or a seller’s market and how fair the listing price is will help you determine if, and how much, you should negotiate. A buyer’s market means there are more properties for sale than there are potential buyers, so sellers may be anxious to sell their properties – and will make more concessions as a result.
As a home buyer or seller, you’ll always want to push for your personal interests. Just remember that you may be on the other side of the transaction one day.
5. Shore Up Your Credit
Lenders take your credit score seriously when considering your mortgage rate, and a low score can result in little to no mortgage options. Before you even consider buying a house, be sure that your credit cards are paid off in full, that you don’t have any discrepancies with your bank, that your revolving utilization is low, and that you don’t have any recent hard inquiries into your credit. Such small changes can have big impacts on your mortgage rate, impacting your monthly payments for up to 30 years.
6. Enter a Homebuyers Program
Homebuyer programs exist across the nation to help first-time buyers cover homebuying costs – including right here in Nevada! Certain programs, such as the Home is Possible program, offer assistance in covering down payment, mortgage interest, and other housing expenses. This kind of program helps ensure your home purchase doesn’t affect your financial stability, while also encouraging greater financial literacy.
7. Educate Yourself on Homebuying
Whether you’re confused about the technical language of housing mortgages, or whether you want to learn more about housing resources in Northern Nevada, educational programs on home buying can help answer your questions – and offer new doorways for savings.
8. Compare Mortgage Rates
When it comes to your mortgage rate, you may want to shop around. Going with the first lender you find for your home mortgage might mean missing out on better financial opportunities. Receiving estimates from multiple lenders gives you flexibility in keeping your mortgage rate low, and it also reduces the risk of you choosing a predatory lending policy.
Get pre-approved from a mortgage lender, as this will help you understand what loan you can qualify for, and at what interest rate. Having this knowledge will help you craft a smarter budget, and it may bring your mortgage rate down as well.
If you want to get it right the first time, ask your Realtor (that’s me!) for a professional recommendation. We usually have a great team of real estate professionals in our network!
9. Buy For Both Now AND the Future
Buying a home is a decades-long commitment. You need to buy a house that allows those decades to flourish. This means a house that has enough space for your family planning, as well as a house that will increase in property value in case you decide to ever sell it or rent it.
10. Use a Local Realtor
The real estate process can be daunting. Why go through it alone? The knowledge of a qualified real estate agent can be immensely beneficial. You gain access to their knowledge of the neighborhood and the home buying process, while also having a professional negotiator handle your housing bid for you.
If you’re looking to buy your first home in Northern Nevada, downsize for retirement, or build your real estate investment portfolio in Reno, the Caroline Mathes Team is ready to help! With decades of experience and a love for the Reno area, I’m ready to welcome you as my neighbor. Reach out today, and let’s discuss your property move in Reno, Sparks, or Carson City, NV.