9 expert tips for first-time homebuyers

Flickr / Holly Lay

Buying your first house can be an excellent test of patience, endurance and resilience.

If you’ve never been through the process before, it can certainly be an intimidating one. From scary terms and bidding wars to that tiny matter of plunking down a whole heck of a lot of money for a down payment, most people who are buying their first homes could stand to use a little help along the way.

We’ve tapped into some experts from across the country to find out what their top tips are when helping first-time homebuyers find and purchase their dream houses. Use some of these whenever it’s your turn to take a ride down Homebuyers’ Lane.

Tip No. 1: Determine a comfortable budget

Expert: Russell Vilt, Managing Broker & Owner Excel Condos, Chicago, IL

What it means: Nothing can be done when it comes to buying a home without first understanding your budget. “I always suggest speaking with a lender who can help determine their buying power,” says Vilt. “The sales price of a home is not the only expense, so they need to be aware of taxes, assessments (if it’s a condo), homeowners’ insurance, etc.”

A tip from MagnifyMoney: be sure not to let a mortgage lender or realtor talk you into buying more than you can truly afford. Just because you get approved for a $300,000 mortgage, it doesn’t mean you should get a $300,000 house. You should also learn how to hack your way to a cheaper mortgage.

Tip No. 2: Get pre-approved by a lender as soon as you think you want to purchase a house

Expert: Rhonda Fee, broker/realtor, Aspire Realty Services, Pleasanton, CA

What it means: Pre-approval will be your road map for a successful purchase, which is why it’s so important to get this part rolling right away. “Understand what bills need to paid off, and how much down payment you’ll need,” says Fee. “The lender should be someone they have been referred to by a friend who had a successful transaction with that lender, or … a realtor. A lender can kill a deal if they are not on top of their game.”

Check out this piece for more about what to know before getting pre-approved for a mortgage.

Tip No. 3: Know what loans are available to you

Expert: Tory Sheffer, realtor, Berkshire Hathaway HomeServices, Michigan

What it means: Sheffer has come to realize that most first-time homebuyers tend to know the basics about buying a home — like what a mortgage is, for example — but that’s about it.

“They aren’t aware of the different options available to them with Conventional, FHA, Rural Development and 80/10/10 Piggyback loans to help buyers who do not want to pay Private Mortgage Insurance,” he said. To help, Sheffer makes sure to take some time and explain to his clients the difference between these additional options. For example:

• Rural Development is a zero down payment program
• FHA is a 3.5% down payment
• 80/10/10 is a 10% down payment with 10% as a second mortgage to avoid PMI, which in turn lowers the monthly rate, more often than not
• Conventional Mortgages are not insured by the federal government, but more often than not PMI is required until the buyer has built 20% equity in their home. Learn more about why you should aim for a 20% down payment.

Ask your broker or lender for more specific information about each.