While purchasing a new home is a thrilling experience, the process is quite complex. This leaves first-time homebuyers frustrated and overwhelmed. Nonetheless, knowing what to anticipate enables you to prepare better. This article discusses four common challenges faced by homebuyers.
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Raising the down payment
While a down payment significantly reduces what you owe your lender, the interest paid over the loan’s life, and the monthly mortgage repayments, raising the money is a major challenge for most homebuyers, first timers, holding them back from acquiring their dream houses.
Dependence on personal savings to put the 20% down payment together may take a long time, discouraging most homebuyers. This is because property prices have overtaken salary gains, making it harder for potential homebuyers to save for a down payment.
Nevertheless, personal savings are not the only way to fund your dream home’s upfront cost. There are various quality homebuyer assistance programs you can leverage to pay for your down payment. So, research and check their eligibility criteria to determine if you’re a suitable candidate.
Attaining credit score requirements
Property loan interest rates significantly depend on a homebuyer’s credit score. Lenders assess your credit report to ascertain your eligibility for a home loan and determine your interest rate. Low credit score qualifies you for high interest rate-home loans. To secure better home loan interest rates, find ways to build/ improve your credit score.
Budgeting
Budgeting when buying a new home keeps you in charge of your spending and helps you find a house you can afford. When budgeting for a new house purchase, look at the following:
- Monthly income and expenses: Assessing these elements enables you to decide the amount you can set aside for the new home. It also lets you spot areas you can save on
- Down payment: Including the down payment amount you can afford in your budget enables you to calculate your dream home’s possible loan principal. The amount to set aside depends on the loan type you want and your lender
- Monthly housing spending: Upon determining your income and the down payment you can put towards buying a new home, determine the amount you can comfortably spend on housing monthly. This should include homeowner’s insurance and property taxes. You should also add the homeowner’s association fee and home loan interest, and principal
- Closing costs: These include extras costs and any fee that goes into the home purchase process, like an appraisal
- Home maintenance: Add expenses for home maintenance costs like lawn care and home repairs for an all-round budget
Preparing a home-buying budget keeps you in control of your spending while ensuring you don’t get into unnecessary debts.
Finding the best location
Finding the best location to purchase a new home is among the many challenges homebuyers face. Nevertheless, finding a property within your spending bracket in your preferred location isn’t easy. To choose the best location, consider property value and close amenities.
If you have kids, look at the school district to ascertain whether it’s what you want for them. Don’t forget about security and the daily commute.
Endnote
Home-purchase procedures are complex. However, familiarizing yourself with the common challenges homebuyers face and finding ways to resolve or avoid them can ease the process.
