As a student, buying property is exciting, but it can also feel overwhelming. You can feel overwhelmed when you see other individuals buying property at a median of $250,000. You can also feel devastated after seeing available properties flying off the market in only two weeks.
With real estate trends such as these, you might rush to buy a property without putting in much thought. Rushing to buy a property can tamper with your financial goals. It can also put you in a position where you will have to pay for an unplanned mortgage.
Trust us; no student wants to be in a position such as this! As such, it is worth doing things the right way. And, this means buying a property that you love and does not tamper with your future financial goals.
We have curated a list of tips that students can use when buying a property. Put these tips into practice so that your first property will be a blessing and not a burden.
1. Start Saving for a Down Payment Early
Many individuals put down 20%, but many lenders now allow you to put down much less. First-time property buyer programs permit you to put down as little as 3%. Putting down anything below 20% can result in:
- Higher Costs,
- Paying for mortgage insurance, and
- Difficulties in making a down payment.
Use a down payment calculator to figure out the best way you can arrive at the perfect amount. If you want to save for a down payment in an effective manner, you can:
- Work extra shifts,
- Using a Essayzoo.org for save your valuable time,
- Set tax refunds aside,
- Set up a savings plan, and
- Use an app to check your progress.
2. Explore Your Mortgage and Down Payment Options
There are various mortgage and down payment options from which you can choose from. Each option has its own advantage and disadvantage. If you cannot come up with a down payment at the moment, have a look at these loans:
- VA Loans
VA loans sometimes do not need you to make a down payment.
- FHA Loans
FHA loans permit you to make down payments that go as los as 3.5%
- Conventional Mortgages
Conventional mortgages permit down payments as low as 3%.
3. Determine How Much Property You Can Afford
Before you buy a house, go over your monthly budget to determine how much property you can afford. You should ensure that your budget has room for other things. You should also ensure that your monthly housing costs are not going to exceed 25% of your monthly salary.
For example, if you want to buy a home with a:
- Home Value $200,000
- Down Payment $40,000 or 20%
- Type of Mortgage 15-year Fixed
- Interest Rate 3.6%
Your total monthly payment will be $1,410. Use a mortgage calculator to determine an amount that you are comfortable paying. Do not forget that homeowner’s insurance and property taxes will affect your monthly salary. Ensure that you factor everything before you settle on a property price.
4. Organize Your Documents
Experts from the best Essay Writing Service can always safe your time in college and assert that before buying a property, you should get your documents in order. The documents needed to buy a home include:
W2s are tax and wage statements which your employer issues to you. Lenders will need you to provide W2s for the last two years.
- Current Pay Stabs
You will have to provide your last two pay stubs. Ensure that you make photocopies and remain with the original copies.
- Bank Statements
Some lenders will need you to provide two months, while others will ask you to provide three months of bank statements. Ensure that you make a copy from every lending institution. Photocopy each page of your bank statements, even the blank pages, as silly as it sounds.
- Copy of Current Driver’s License
You can carry your driver’s license for identification if you are meeting with a lender. Otherwise, you can make a copy of your driver’s license and attach it to your documents. You driver’s license must have a photo of you.
- Asset Statement
If you own mutual funds, bonds, retirement accounts, or stock, make a copy of each statement. Make sure that you photocopy all your asset statements and do not provide original copies.
5. Hire an Agent
If you prefer going to open houses and looking through a pile of homes online, you do not have to hire a buyer’s agent. Hiring an agent is beneficial because:
- Agents always know about new listings that are not yet in the market.
- Some agents can preview homes on your behalf
- Agents are adept in spotting overpriced listings and can advise you on what listings are ideal.
- You can use the agent’s fuel and not your own when touring homes
- Agents always know the best property for students. Agents can send you listings that fit your parameters. This will save you time because you will not have to look at listings that are under contract.
6. Choose the Right Type of Property and Neighborhood.
You may think that you want a family home. This could be perfect if you want a lot of room or a big backyard. But, if you are willing to give up space to buy profitable property, and you are okay with paying a homeowner’s association fee, a townhouse or condo could suit you better.
Even if you find the right type of home, the neighborhood could be the opposite of what you want. So, ensure that you:
- Drive or walk through the neighborhood on different days and times to check out activity levels, noise, and traffic.
- Look at the crime and safety statistics of that neighborhood.
- Check out nearby schools since they impact home value.
- Map the nearest supermarket, clinic, pharmacy, grocery store, or any other social amenity you will use.
7. Conduct a Home Inspection
Some states conduct home inspections before a buyer makes a purchase offer. In other states, home inspections are part of a contract contingency. A contract contingency means that the buyer can cancel the contract. You may not want to buy a home that has termite-infested walls, for instance.
Sellers do not have to make repairs if buyers detect problems during a home inspection. A home inspection is for the benefit of the buyer. At times, when a buyer requests the seller to repair the house, the seller will agree to the request instead of blowing the deal.
8. Get a Loan
You do not always have to have a bank or mortgage broker in your side pocket before you buy a home. Despite this, it is wiser to get loan pre-approval beforehand. This way, you will know for sure how much property you can buy. Many sellers will not look at an offer if they are unsure that a buyer can get a loan.
If you are a first-time buyer, you can get an FHA loan. FHA loans are ideal for first-time buyers because the payment needed is less than that of conventional loans. But, if you are considering buying foreclosures, conventional buyers are prioritized with REO banks.
Are You Ready to get started?
Buying property is exciting. But, there are a lot of things you need to consider before making such a big move. The tips discussed above are the general rules for buying property. Incorporate them into your property searching endeavors and watch as the entire process becomes easier. Well, what are you waiting for? Go and get your property!