Finding The Right Home For You: A Guide For First-Time Home Buyers

Posted by:
Caroline Soriano
August 04, 2023
9 minutes, 16 seconds

Buying your home is thrilling and overwhelming at the same time, especially if you've never done this before. You might be working hard to save money for your down payment while your partner might be searching for ways to improve and renovate it as you both like. 

Wherever you are in your planning, you must know that there are many things to consider as you set this path. Other than knowing how much deposit to save, you also have to check neighborhoods, shop different loan options, learn the art of negotiating, and many more. However, buying your first home should not always be terrifying. With the right guidance from real estate experts, you can make the entire process memorable and stress-free.

Taking The First Step

Taking the first step is the easiest and the hardest at the same time because this is knowing how much money to save for the property you want to buy.

How much the down payment will be and how long it will take to save depends on several things, such as:

  • Your income
  • The total price of your dream home
  • The amount you're willing to save
  • Your lifestyle

Saving up thousands of dollars can seem intimidating, but you don’t have to starve yourself or forget your obligations just so you can save up. With the right budgeting skills and a couple of strategies, such as finding an additional source of income, you can do this.

It’s important to know what your target deposit will be. 

How will you know, you ask? 

You may start by searching the areas you want to buy the property to get an idea of how much down payment you'll need. It is also a good idea to look for recent sale prices of homes similar to the real estate in Indiana you want to buy to have an estimate. Check the average year-on-year percentage price increase. By doing so, you could have an idea of how much your first home will cost. 

real estate agent with prospect home buyers

If you’re planning to get a mortgage loan or borrow from lenders, make sure you do research first and ask the following questions:

  • What are their terms and conditions?
  • How much is their interest rate?
  • What are their charges?

Asking these questions will also help you in setting your target savings.

Saving Tips For Home Deposit

  • Create a realistic budget

Creating a realistic budget means including even the non-essential expenses you might have. This will help you understand which expenses you need to cut out or reduce. 

  • Set a deadline for your savings

Other than setting the amount you need to save, create a realistic timeframe as well when you want the savings to be completed.

  • Consolidate debts

Combine all your existing debts, repay them as soon as you can, spend less, and save more.

  • Set up a specific bank account for your first home deposits

Every payday, put your savings deposit into this account and don’t transfer the money out or spend it unless it's for the down payment.

First-Home Buyers Fees

There are additional costs you may need to pay to finalize the purchase of your home, such as:

  • Application Fees – These are the costs the lenders charge for the application process and settlement home loan process. 
  • Conveyancing Fees – These include the cost of transferring ownership from the seller to the buyer. 
  • Taxes – These are the costs charged by the government. It is a percentage of the purchase price of the property you’re buying.  

Save For Closing Costs

Closing cost is the process fee you pay to lenders when you close your mortgage. It includes attorney’s fees, appraisal fees, inspection fees, and other fees depending on the loan provider.

Applying For The Right Home Loan

Finding the right home is one thing; looking for a home loan that suits your needs is another. While there are many mortgage providers out online and offline, you must understand what comes with it first.

Some of the things you have to consider are:

  • Fixed interest rate – When we say that the interest rate is fixed, the rate stays the same throughout the loan. It will be easier to do the budgeting when it is fixed. 
  • Variables interest rate – With variable interest, the rate fluctuates over time depending on the market. While it might sound like a good thing since the interest can decrease if the market goes down, it might also increase if the market goes up. This makes it challenging to create a budget.
  • Offset Accounts – This is a transaction that is linked to your mortgage. When you have money in this account, you can offset the amount you owe on your loan and will only charge interest on the difference. It can potentially reduce the balance of your loan and can help you pay faster. 
  • Redraw Facilities - It lets you ‘access’ extra repayments you’ve made on your home loan above the minimum required repayments.
  • Broker – Loan brokers are the middle person between a borrower and a lender. For first-time home buyers, using a mortgage broker can be good; however, you have to understand its pros and cons first to know if it's right for you. 
  • Loan Feature - The features of a loan often include the interest rate, repayment time frame, repayment flexibility, early payment fees, and any other upfront or ongoing home loan fees.

Get A Pre-approved Loan Before Hunting Begins

Getting pre-approved is as close as getting your creditworthiness without having a purchase contract. Lenders verify your financial information once you complete the mortgage application and will tell you how much money you can borrow. They’ll also have a credit check. 

When you are pre-approved, it will make sellers think that you are serious about getting the home you want. Just don’t be carried away if some lenders offer you a bigger loan than you applied for. Stick with your budget and only apply for loans that you can afford.

Close The Deal

Once everything goes smoothly and the seller accepts your offer, you can close on the real estate in Indiana. The average time takes at least 48 days. During this time you can process other things for the next steps like having the house for a home inspection, which can help you spot potential problems so you can fix them. It will also save you if you think that problems are a bad deal and walk away.

Whether you need help saving for a down payment or closing a deal, our team is here to help! Call us at 317-316-8224 or join our mailing list to get home buying and selling tips and the latest updates.

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