5 Tips to Buying an Affordable Home for First Time Buyers

It takes careful planning to buy your first home. Whether you’ve saved up from your job, taken on a side hustle, or inherited enough cash for a down payment, it’s a proud day when you know you’re ready to become a homeowner.

But don’t bid high on the first property you see. No matter the size of your savings account, it’s important that your first home is a good financial investment.

What can you do to make sure you secure an affordable home?

In this short guide, we’ll go over the five best tips for finding and closing on your dream home.

#1 Set Your Budget and Start Searching

The first step to buying a home is figuring out what’s affordable for you.

The multi-hundred-thousand-dollar price tag on prospective homes may seem intimidating but remember: this isn’t what you’ll pay out of pocket. Instead, you’ll likely take out a mortgage loan and make monthly payments.

To make a financially sound decision, you’ll want to check that your mortgage payments aren’t much higher than your current rent and utilities.

To calculate your budget, use a mortgage calculator. Don’t forget to factor in the following costs:

  • Property taxes – Enter the property taxes for a specific property that you’re interested in or look at average rates in your target area.
  • Mortgage insurance – If you’re putting down less than 20% of the home’s purchase price in cash, you’ll need to pay your bank mortgage insurance for six to seven years.
  • Homeowner’s insurance – Likewise, you’ll need to protect your home from theft, vandalism, flooding, and other unfortunate events.
  • Utilities – Consider the added cost of heating a home, plus utilities like trash pickup, water, and sewage management.
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If you’re moving to a different neighborhood, make sure you account for the additional costs associated with new gym memberships, health care providers, and transportation.


#2 Be Ready to Bid

Did you know that placing the first offer on a home may increase your chances of getting it?

You can even put a time limit on your offer. If the seller knows it will expire in two days or a week, they might move to make a decision rather than holding out for a higher offer.

Of course, to place a bid, you need to be prepared with proof of financing, usually in the form of loan pre-approval. So, how do you get that?

#3 Look into Loan Programs for First-Time Buyers

There are numerous programs that make it possible for first-time buyers to afford their dream homes—even with small savings accounts:

  • Veteran’s Affairs loans provide loans with a 0% down payment to qualifying veterans. Look into how to apply for your VA loan and take advantage of this great opportunity.
  • FHA loans come with a down payment as low as 3.5% for buyers who make less than their states’ median income.
  • State programs can also provide financial assistance to help with your down payment or closing costs.

Contact your state’s housing authority to see which programs are available in your area. Then, apply for loan pre-approval.

#4 Write a Love Letter

Have you ever tried online dating?

Did you respond to the messages that said, “Sup babe?” or the ones from people who had actually read your profile and taken the time to craft a unique opening?

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Without a love letter, your offer is essentially just a “sup”—with or without the “babe.”

Instead, try writing a letter to the homeowners that explains why you’re interested in the house. This kind of personalized interest can convince the seller that you’d take good care of their once-beloved home.


#5 Negotiate Concessions

You might be able to save money even after you’ve put in an offer.

For example, how will you pay for a roof replacement? Don’t do it out-of-pocket. If there are any serious issues with a home, ask for a discount on the purchase price.

Likewise, you can ask the seller to help cover some of your closing costs, which usually include the following:

  • Attorney’s fees
  • Home inspection
  • Bank appraisal
  • Title transfer fees
  • Taxes

They’ll be more likely to agree if there are no other offers or they need the sale to go through. But hey, it never hurts to ask!


Finding Home Sweet Home

It can take diligence and patience to find the perfect home. Your first offer might be rejected, or you could find your dream home, only to discover that it has major structural flaws that aren’t worth the hassle.

But as long as you follow the five tips above, you’re well on your way to finding the one—on the housing market, not necessarily those dating apps (sorry!).

Next stop: the garden center for some new houseplants, the hardware store for a

spruce-up paint color, and your favorite vintage boutique for adorable throw pillows, blankets, and wall decorations.

Until then, happy house hunting!

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