5 Tips for first time home buyers in Indianapolis
In the current real estate market, many people are taking advantage of home prices in Indianapolis, coupled with low interest rates to become first time home buyers. When you compare the cost of renting versus buying, it makes perfect sense for many. How can you best prepare for buying your first home?
Here are a few guidelines:
1. Know Your Purchasing Power
Many people begin their home search online and ultimately come across the perfect home. They want to make an appointment to view the home and decide it’s just perfect. They have run all the numbers on a mortgage calculator and accordingly, believe they are looking in the right price point. 9 times out of 10, there are costs they did not consider. It is always best to speak with a lender and know your purchasing power before you start looking at homes. A lender can provide you with the estimated costs associated with your mortgage.
2. Additional Costs of Buying a Home
There are some specific costs of buying a home many first time home buyers don’t know about or consider when using those online mortgage calculators. There are both upfront and monthly costs which have to be figured inwhen your deciding what a comfortable payment would be for you. Since the first time home buyer generally has less downpayment, they will be paying mortgage insurance premium. If you have less than 20% down, you will also have mortgage insurance premiums.
- On an FHA loan, mortgage insurance has an upfront fee, which can be financed into the loan, therefore, making the loan balance higher as well as the monthly payment.
- On both a conventional loan and FHA, there will be monthly payments for property mortgage insurance, as well.
- Closings costs include loan costs, lender’s title insurance, first year’s homeowners insurance, escrow accounts, appraisal and other miscellaneous fees.
- Home Inspection is another cost you will incur upfront
3. Choose the Best Home You Can Afford
In real estate, they say it’s all about location, location, location. The Indianapolis real estate market is no different. There have been an abundance of foreclosures in Indianapolis and it is often tempting for first time home buyers to accept a lower priced home than a home in an area they want to live. It is wise advice to choose an area first or a couple areas of town, then narrow your search to homes in that area within your price range. It is also worth taking a look at a smaller home in great shape, than a larger home that needs too much work.
4. Hire an Independent Inspector
From energy efficient windows to different types of plumbing systems, researching and certifying the materials that make up a potential new home should be a priority for all buyers. Certain types of plumbing systems can be more costly in the long run, just as poor insulation can ultimately lead to higher energy bills. A professional home inspector can help buyers identify the strengths and weaknesses of a given home, and offer tips on how to improve any problem areas. As a first time home buyer, you want to make sure you not buying a money pit.
5. Hire a Realtor.
Even with the enormous amount of information available online, all real estate is local. A Realtor can truly assist you in determining fair market value, therefore protecting your interest and your finances. While independent research is always a great idea, an Indianapolis Realtor will be able to help guide first-time home buyers through the often complicated and overwhelming amount of paperwork associated with buying a home. A good, competent Realtor with experience assisting first time home buyers can also be a wealth of knowledge about loan programs and financing options available in Indianapolis.