Purchasing a home can be an exciting investment in your future. However, if this is your first time buying a house, it may feel like a daunting task. Just like any big decision, preparation is the key to success. Here are some essential tips to consider as you embark on the home-buying process.
Review All Expected Costs
Whether you’re looking for a fixer-upper or a move-in ready home, buying a home is expensive. While the total amount you pay will vary with how much you’re able to spend, here are some of the primary costs to consider: 
- A down payment is the initial amount you’ll be required to pay upfront for a home. With excellent credit, your down payment could be as little as 3% of the total value of the home. But this can still be a significant expense.
- A home inspection can help you find major problems in your prospective home before closing. It generally costs between $300 and $500. However, issues found during a general inspection (e.g., mold) may need to be looked at more closely by a specialist, which can cost more.
- Earnest money is a type of upfront deposit used by some sellers to ensure that you have good faith intentions to purchase their home. Although it is not always a requirement, putting down earnest money may be a good idea in a competitive market. Fortunately for buyers, this money will go directly toward your down payment or closing costs.
- Closing costs are the fees and expenses you’ll pay to finalize your mortgage. They can range from 2% to 5% of the total loan amount.
- Move-in expenses will vary depending on the type of house you purchase. However, you should expect some additional upfront costs associated with moving in such as purchasing new furniture and making any necessary repairs.
Understand Your Home Loan Options
The vast majority of Americans rely on loans to purchase their first homes. Fortunately, there are several buyer assistance programs specifically designed to help you purchase your first house. In Iowa, eligible first-time home buyers can receive down payment assistance and reduced interest rates through the Iowa Finance Authority’s FirstHome Program.
Here are some additional mortgage options that may be available to first-time homeowners:
- Federal Housing Administration (FHA) loans can allow for down payments as low as 3.5%.
- U.S. Department of Agriculture loans are an option for rural home buyers that typically requires no down payment.
- Veterans Affairs loans are an option for current and veteran military service members and usually do not require a down payment.
To guarantee you’re getting the best mortgage rates, consider requesting loan estimates from multiple mortgage lenders. Ask about interest rates, origination fees and the opportunity to purchase discount points, which could lower your interest rate.
Don’t Go Through This Experience Alone
When purchasing your first home, don’t be afraid to ask for help. There are many experienced professionals you can rely on throughout the home-buying process, including the following:
- Real estate agents can help you find the right house, work with sellers’ agents to find you the best deal and put you in touch with other trusted professionals (e.g., mortgage banks, home inspection agents).
- Mortgage brokers are licensed to match lenders with potential borrowers. They can help you shop around for the best loans by comparing multiple lenders.
- Insurance agents can help you find the right homeowners policy for your home and budget. This is a vital aspect of homeownership as nearly all lenders require you to show proof of home insurance before approving your loan.
Contact Us Today
McCune & Reed is here to help you navigate your home insurance needs. Contact us today for the protection your house deserves.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.