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Tips for First-Time Home Buyers

Buying your first home can be nerve-racking and confusing. Getting into the right mindset can save you future troubles. A careful research and good planning always pays.

These tips will help you navigate the process and avoid common mistakes. We break them into three categories:

  • Mortgage tips.
  • House search tips.
  • First-time home buyer mistakes to avoid.

Mortgage tips

Start saving for a down payment early

It’s common to put 10% down, but some banks now allow much less, and first-time home buyer programs. Allow yourself some time to to save up. Do not overstretch your credit.

Understand your affordability, down payment and mortgage options

There are lots of mortgage options out there, each with their own combination of pros and cons. If you’re struggling to come up with a down payment, check out:

The amount you put down also affects your monthly mortgage payment and interest rate. If you want the smallest mortgage payment possible, opt for a 30-year mortgage. But if you can afford larger monthly payments, you can get a lower interest rate with a 15-year mortgage loan.

Research for government programs

Research on government house ownership programs. Federal government l
program like PRIMA can benefit you greatly if you qualify. Research on state level program as well. Sometimes it is available only for the state that you live in.

Determine how much home you can afford

Before you start looking for your dream home, you need to know what’s actually within your price range and which area that you can afford. In order, to make life easier for you we have built home search tool. Use it to your advantage.

Check your credit and pause any new activity

When applying for a mortgage loan, your credit will be one of the key factors in whether you’re approved, and it will help to determine your margin of financing and possibly the loan terms.

Secondly, check your credit score and improve it. Update your arrears and lower down your credit card balance. Banks calculates credit score based on financial behavior, income, expenses, financial commitment and your demography like age, sex, year of employment, marital status, education level.

To keep your score from deteriorating when you apply for a mortgage, avoid opening any new credit accounts, like a credit card or auto loan, until your home loan approved.

Compare mortgage rates

Many home buyers get a rate quote from only one lender. You can compare mortgage rates from financial aggregator like imoney, gobear and ringgitplus. During campaign period you might get additional goodies. Get at least three quotes from different banks and compare both rates and fees.

You must read the product term sheet to understand mortgage product features. Many banks are offering Flexi Loan where you have the flexibility to pay part or all of your principal early. Research on Islamic Home loan as well as they have discounts for stamp duty, rate ceiling and some other good features.

House search tips

Hire the right professional agent

You’ll be working closely with your real estate agent, so it’s essential that you find someone you get along with well. The right real estate agent should be highly skilled, motivated and knowledgeable about the area.

Pick the right type of house and neighborhood

But even if the home is right, the neighborhood could be all wrong. So be sure to:

Common first-time home buyer makes

With so many things on your mind, it’s not surprising that some first-time home buyers make mistakes they later regret. Here are a few of the most common pitfalls, along with tips to help you avoid a similar mistakes.

Not saving enough for after move-in expenses

Once you’ve saved for your down payment and budgeted for closing costs, you should also set aside a fund to pay for what will go inside the house and moving in cost. What goes inside the house includes furnishings, appliances, rugs, updated fixtures, new paint and any improvements you may want to make after moving in.

Buying a home for today instead of tomorrow

It’s easy to look at properties that meet your current needs. But if you plan to start a family, you may need to buy a larger home now that you can grow into. Consider your future needs and wants and whether the home you’re considering will suit them.

Negotiate

A lot can be up for negotiation in the home buying process, which can result in significant savings. Are there any major repairs you can get the seller to cover, either by fully handling them or by giving you a credit adjustment at closing? Is the seller willing to pay for any of the closing costs? If you’re in a buyer’s market, you may find the seller will bargain with you to get the house off the market.

Compare surrounding property prices as well, we have the tool to help you scan the best deals around.