Buying a home is always a major financial decision, and if it’s your first home, you may be extra nervous about the process. Fortunately, with a bit of help from the bounty of modern technology (most of which is free), you can make the process much easier – and end up with the home of your dreams.
Key Challenges of First-Time Homebuyers
Let’s start by addressing some of the most important challenges faced by first-time homebuyers:
- Priorities and goals. Is it better to get a house in a good neighborhood that’s not in great shape, or a house in a less appealing neighborhood that’s in amazing condition? Are you optimizing for the short-term or long-term future? Do you need to find a home for sale with a pool in Scottsdale? It’s tough to set these goals and priorities for yourself with minimal experience.
- Budgeting. How much of a house can you truly afford? You may have an intuitive answer ready, but are you confident that’s what’s best for your long-term financial future? Budgeting can be very difficult for first-timers.
- The down payment. If you want to avoid private mortgage insurance (PMI), you’ll need to save up 20 percent of your home’s purchase price before moving forward. Even if you’re alright with paying PMI, you’ll still need at least 5 percent in most cases. Coming up with this money from scratch can be challenging.
- Credit history. You’ll need a solid credit score if you want to qualify for a favorable loan. But what if you have no credit? This is a dilemma faced by many first-time homebuyers.
- Choosing a lender. What makes one loan better than another? What makes one provider better than another? Even experienced financial experts sometimes struggle with these questions.
- Researching and shopping. How do you know if a house is worth touring? If you’re totally unfamiliar with a subject related to homebuying, how do you start researching it?
How Technology Can Help You Buy Your First Home
Technology can help you in your home search in several ways, including:
- Preliminary research. Thanks to the internet, social media, and an abundance of websites and individual experts dedicated to educating the population, it’s easier than ever to find the information you’re looking for. You can easily look up the neighborhoods in and around your city of choice, review the mechanics of home lending, and even figure out the best real estate investment strategy for long-term gains.
- Mortgage calculators. What will your monthly payments be if you borrow $160,000 for a $200,000, with a $40,000 down payment? How will that change if interest rates rise? What will you pay for property taxes and insurance? Thanks to interactive mortgage calculators, even inexperienced buyers can have an easier time answering these questions.
- Credit score calculators and planning. With online tools, you can pull a full credit report on yourself – or even estimate your FICO score without doing a hard pull on your credit. If you aren’t familiar with your financial history or financial status, this is incredibly important; it can help you figure out if your credit score is in a good enough place to qualify for a good loan. And if it isn’t, it can help you figure out how to repair that score.
- Interactive budgeting and saving. Budgeting and saving money for your home’s down payment can be difficult no matter how much experience you have or how much money you make. But with modern technology, it’s much more intuitive. You can download a budgeting mobile app, keep track of all your expenses, and even save money automatically whenever you get a paycheck.
- Loan shopping. Comparison shopping for a mortgage used to involve calling or visiting multiple banks, one at a time, and evaluating their offers manually. Today, it’s easy to see dozens, or even hundreds, of loan options at a glance, and evaluate them apples to apples to figure out the best fit for your needs.
- Virtual home tours. Thanks to real estate listing websites, you can quickly review hundreds of properties in your vicinity and do so remotely. If you’re lucky, you can even set up a virtual tour – and get a feel for what it’s like to walk through the property without ever really stepping foot inside of it.
- Networking. Finally, technology allows you to spend more time networking. You can reach out to experts on social media, follow prominent investors, and even connect with real estate agents – all of whom can educate you and help you make a better decision.
Even with the help of best-in-class technology tools, buying your first home is still intimidating. Take the time to research your decision, trust experts to advise and guide you throughout the process, and try to have some fun along the way.