Sayings like “Don’t bite off more than you can chew” or “Fools rush in” may come to mind when you start thinking about purchasing a house in South Carolina. At any stage in life, it’s a big step. For first-time home buyers, the process of finding a home, making an offer, and closing the deal can be scary.
There are several things first-time home buyers can do to minimize stress and be as prepared as possible, especially for the financial aspects of buying a house. Many people who have jumped into the market too soon have wound up taking on mortgages they can’t afford. This can (and often does) lead to financial disasters, such as foreclosure. It doesn’t have to be that way.
First-time home buyers can start a savings account
Before you begin searching online for your dream home, learn more about how much money you’ll need to go to closing and move into a new house. In addition to a down payment, there may be closing costs (due on the day you finalize the deal) and moving costs as well. (Will you need to buy new furniture, rent a truck or pay for a moving company?)
To ensure readiness, it’s wise to start setting money aside for a home purchase before you contact a real estate agent or make an offer on a house. Some banks offer first-time home buyers savings accounts.
Know your options before choosing a mortgage
First-time home buyers should be aware that there are numerous types of mortgage loans. If a buyer is a U.S. military veteran, a VA loan might be an option, in which case, a down payment might not be needed. Acquiring a home with a VA loan doesn’t mean the Department of Veterans Affairs is loaning you money. It means that the VA is promising to pay back a portion of your loan to the lender if you default on the mortgage.
In addition to a VA loan, you might be eligible for other types of mortgage loans, such as a USDA loan or FHA loan. Determine whether a conventional mortgage loan or one of the other options mentioned in this section is the best fit for your situation before making an offer on a house.
Shop around and compare lenders
Avoid the temptation of randomly choosing lenders and going with the first one who agrees to approve your mortgage loan. Take your time and compare what each company has to offer. Financial analysts say that first-time home buyers can save between $600 and $1,200 per year by comparing origination fees, interest rates and terms between lenders.
Research your options, start saving money (every little bit helps) and choose the path that enables you to get the best possible deal when you buy a house in South Carolina for the first time.