Tips for First-Time Homebuyers in 2021
Buying a home for the first time is an exciting milestone, but it can also be a challenging one. Plus, in the aftermath of COVID-19, we’re experiencing a booming housing market with limited supply and tremendous demand. Thus far in 2021, homes have often been selling for more than the listing prices with some buyers even ending up in bidding wars with one another. First-time homebuyers may find themselves overwhelmed and wondering if they should buy now or wait. At Sandy Spring Bank, we’ve compiled a list of tips to help navigate this complex market and determine if you’re ready to buy:
- Know your budget
With higher selling prices, first-time homebuyers need to budget for the higher monthly payments and upfront costs associated with higher sales prices. Before you start looking for a home, you need to know how much home you can afford based on your down payment and the amount you want to finance. You can use Sandy Spring Bank’s mortgage calculator to help you determine a home price that fits your budget.
- Be sure you’re ready to commit to a loan
Buying a house for the first time is a major life decision. Most traditional loans carry a term of 15 to 30 years, and you need to be sure you’re ready to commit. Some important questions to ask yourself before applying for a home loan are:
- Are you able to contribute to a down payment, and are you aware of down payment assistance programs you might be eligible for?
- How is my credit rating?
- Do I have a significant amount of debt?
- Would more than 30 percent of my income go towards monthly payments?
- Do I plan to stay at my home for at least five years?
- Do I have an emergency savings account, so I could still pay my mortgage if my employment status changed?
- Pay attention to property taxes
When thinking about buying a home, you’ll also want to consider the home’s property taxes. Property taxes vary based on the state, city, county and town, so it’s important to review your potential property tax bills along with the home’s property tax history to ensure the costs and timing fit your budget.
- Protect your investment
With so much competition, some homebuyers are choosing to waive appraisals and home inspections to make their offers more attractive to sellers. Home appraisals provide an accurate measure of a property's value and help ensure you’re not paying more than a home is actually worth. At Sandy Spring Bank, we require appraisals on every loan application unless the borrower and the property qualify for a waiver, which is rare. Inspections are also a very important part of the homebuying process and waiving them can be risky. We recommend that all buyers perform an inspection to protect their investment and the health and safety of their family.
- Learn about first-time homebuyer opportunities
While housing prices are high, interest rates are still historically low. If you plan to buy a home soon, your monthly payments may be lower, which can help you better afford the home of your dreams in today’s sellers’ market. You may also be able to take advantage of different programs and tax benefits available for first-time homebuyers. It’s important to work with a lender that can explain your options and offer you a mortgage solution that meets your specific needs. Local community banks, such as Sandy Spring Bank, are a great resource to explore when looking to buy your first home.
- Get pre-approved
The best time to get pre-approved for a home loan is just before you start looking for homes. The pre-approval process helps you understand what you can afford, allows you to shop for homes within that price range and helps you make more timely offers. That said, just because you get pre-approved for a certain amount, doesn’t mean you want to spend that much on a home. It’s important to also factor in the criteria above before you make any offers.
Buying a home is an exciting time in life. However, many first-time homebuyers are surprised by how much it actually costs to purchase a house, especially in 2021. By finding the right banking partner to help you through the process, you can focus more on the excitement (rather than the stress) of buying your first home. Sandy Spring Bank will help guide you through the homebuying process and serve as your financial advocate while you house hunt. With flexible mortgage solutions and a strong banking team, fulfilling your dream of owning your first home could be right around the corner.
This material is provided solely for educational purposes and is not intended to constitute tax, legal or accounting advice, or a recommendation for any particular transaction.