What an interesting time we’re living in and with these unprecedented times, some people have wondered if doing normal things like buying a home have been thrown out the window. The truth is that the real estate market has continued to grow in many places, despite the unique challenges brought our way during 2020.
Now, in 2021, with things slowly changing and vaccines available in most countries, you could be settling into the idea of buying your first home this year. Real estate is an ideal investment but there are things you should know, if this is your first time around. Consider these following tips as you start searching for your dream home:
- Which loan is the best option for you? When it comes to buying and owning a home in one-shot, there is a very small percentage of people who actually achieve this. For most people, the best way for you to be able to buy your home is to get a loan. There are a plethora of options available, such as VA vs conventional loans. It’s important to check out the benefits offered by loans out there and whether there is one specific for your situation, such as a VA loan if you’re in the military.
- Save for that down payment. Unless you have someone in your family or friend circle who would love to gift you the money for a down payment, it’s wise to have some savings available for the down payment. Obviously, this is something you would have wanted to start working towards saving in previous years, if you’re now ready to put down the 20% down payment from the overall asking price. The truth is that you can put down less than 20% but then you’ll be needing to pay the mortgage insurance, which is going to cost you more monthly on your mortgage payment. If someone does give you money for the down payment (lucky you!), make sure to get a letter or proof that the money was a gift. Essentially, you need to have proof that it wasn’t a loan and you don’t owe money to the giver.
- Take time to consider how much you can actually afford. Many people like to shop above their means—at least, at first. The truth is that you should plan to look for homes that may be a bit lower priced than what you’d be willing to pay, as there will be a plethora of costs and fees that are involved with buying a home and maintaining it, and you won’t want to be suffering every month, just to pay your house bills. Don’t forget things like property taxes and insurance are costs that come from owning a home. While you may need to compromise on some areas when it comes to the “dream home” you thought about buying, there are bound to be options that will be comfortable enough for you.
- What’s your credit score like? How good your credit score is can help you a lot when it comes to buying a home. While you may be able to buy one with a credit score that is below 620+ depending on the loans you apply for, the best results will be with at least a good or excellent credit score, as it will decrease interest rates and allow a larger home-buying budget. Since we’re at the beginning of the year, consider working harder than ever to achieve the holy grail of credit scores: above 720+.
2021 is a great year to invest in your first home and with times changing, it can be beneficial to own your home for your comfort and peace of mind. Consider these details as you start to look for a home you can call your own in 2021.