Top 5 Things for First Homebuyers

Top 5 Things First-Time Homebuyers Wish They Knew

Buying your first home is an exciting journey, full of picking out paint colors, daydreaming of a new Saturday morning pancake tradition, and imagining day-to-day life in your beautiful new space. But between scheduling home inspections, packing boxes, and organizing a down payment, many first-time homebuyers get caught up in the overwhelm and may miss out on small opportunities that can make a huge difference.

We’re sharing the top five things first-time homebuyers wish they knew before and during the process, so you can be informed and prepared for every step of the journey (instead of learning the hard way).

1. You don’t need a 20% down payment 

Many first-time homebuyers think that a 20% down payment is required to purchase a home and may end up disqualifying themselves from their dream home. While 20% is considered the accustomed standard down payment and can eliminate private mortgage insurance (PMI), an abundance of financing options are available today. In fact, first-time homebuyers can put as little as 3% and in some cases, 0% down on a new home.

How much should first-time buyers put down? The amount relies on multiple different factors, including whether you’ve owned a home before, whereabouts, how much you have saved for a down payment, and more. Many states, including California and Nevada, offer down payment assistance for new homebuyers, making it easier to make a down payment on the home of your dreams.

2. Buying new can save you in the long run 

In today’s market, new homes are often more affordable than used homes, something that may come as a surprise to many buyers. With builders offering competitive pricing, incentives, and preferred lender programs that reduce interest rates or lower monthly payments, the overall cost of owning a new home can be significantly less. Older homes may have a lower sticker price, but once you factor in costly repairs, outdated systems, higher utility bills, and potential renovations, the expenses add up fast.

Existing residences often attract first-time homebuyers for their lower price tag, but they tend to come with hidden expenses. Older appliances and systems may give out or run inefficiently, causing higher utility bills and unexpected repairs.

On the other hand, new construction homes are designed for optimal energy efficiency and new systems, requiring less maintenance, a decreased chance of appliance replacement costs, and lower bills. Plus, many new construction homes come with home builder warranties and tax benefits exclusively for homebuyers, like mortgage interest deduction, lower private mortgage insurance (PMI) requirements, property taxes, and more.

While used homes may have a smaller upfront cost, the peace of mind and financial security of a new construction home is worth its weight in gold.

3. Know what financial strategies are available for you 

Purchasing a home feels unattainable for many first-time homebuyers right now, but the truth is there are financial strategies and opportunities available to assist. Let’s explore two of the most popular:

• Reduce your monthly payments with a 2-1 buydown. Interest rates feel especially high right now, making homeownership feel too far out of reach. To make the dream of owning their own home achievable, more buyers are taking advantage of a 2-1 buydown. This financial plan is typically offered by your builder or lender, reducing the interest rate on your loan two percentage points in the first year, then one point the second year. Many buyers then explore refinancing to lock in potentially lower interest rates.

• Explore FHA loan programs for first-time buyers. Insured by the Federal Housing Administration (FHA), these loans typically allow low down payments, and on some occasions, $0 down. While FHA loans require mortgage insurance and the residence meets the department’s standards, it’s often worth looking into.

4. Get pre-approved before you fall in love 

Many first-time buyers start the search for their dream home by scrolling through listings, but there’s one key step they need first: getting prequalified, then pre-approved for a mortgage. Prequalification gives buyers a general idea of how much they can afford and helps set realistic expectations before touring homes. From there, a mortgage preapproval provides a more detailed financial review, where a lender evaluates income, credit, and debt to determine the potential loan amount and available rate. It also strengthens a buyer’s position by showing sellers they’re serious and financially ready to make an offer.

This gives first-time homebuyers a competitive edge, helps narrow down the search to homes within your budget, and streamlines the entire process. Additionally, it helps  smooth the path to homeownership when choosing from quick move-in homes or a limited selection. In other words, a mortgage preapproval is your homebuying superpower.

5. You can make it yours without breaking the bank 

Many new homebuyers dream about what their first home will look like, but when purchasing older homes, they often discover layouts that need updating or other more pressing updates that push decor to the backseat. However, many new home builders offer included features that reflect today’s trends, along with smart home upgrade packages that add real value to not only your investment, but your lifestyle.

Becoming a first-time homebuyer is an exciting, life-changing moment, but it can also feel complicated. With these tips and the right community, finding the perfect place to call home becomes stress-free. At Blue Mountain Communities, we’re dedicated to supporting you through every step of the buying journey, from connecting with a preferred lender to discovering your dream home. Learn more about our exceptional communities and take the first step toward owning your dream home.