First-Time Home Buyer in Prescott: 6 Things to Know

Buying your first home can be daunting. From inspections to closing costs, the details can impact your budgetary considerations and timeline. For a better chance of landing the home you want, learn as much as possible on the front end and find a skilled Real Estate Agent. You can encounter setbacks, delays, and other uncertainties during the search with more confidence if you are armed with knowledge. Establish your ideal home criteria and organize your finances as you begin your journey.

Continue reading to discover six things every first-time home buyer in Prescott should know.

You will enjoy a more efficient and favorable home search if you are clear on your non-negotiables before you start perusing listings. Think of these as areas where you are unwavering in your preferences — do you need at least four bedrooms? An updated, functional kitchen? A large yard? At the same time, make a list of those attributes where you are more willing to compromise. You may be able to accept a home that lacks a fireplace or one that has three bedrooms instead of four.

Know the local market conditions, as well. For example, right now, Prescott is considered a neutral market. This means that it favors neither buyers nor sellers. In fact, the median sold price in Prescott has dipped by 2.2% since a year ago, meaning that buyers may not necessarily have to spend as much on a home. This is particularly true for those seeking a four-bedroom home, where the median sold price is down by 15.9% since last year.

While you might feel confident about finding a home you like without any help, your ability to secure a deal for that home falters when you work alone. Selecting a well-respected and licensed Real Estate Agent gives you more credibility as a buyer. After all, 86% of buyers purchased their homes from a Real Estate Agent or broker last year. If you have an agent, sellers may feel more inclined to work with you.

When exploring the Prescott real estate market, select an agent with experience in the specific neighborhoods of interest. A skilled agent can distinguish between neighborhoods on the rise and those where your dollars will not go as far. Plus, you will benefit from their connections and insights. They can assemble a lineup of listings and coordinate showings so you see houses quickly in a competitive market.

It is commonly assumed that a buyer must put down 20% of a home’s value as part of a real estate transaction. However, this is dated information, and most new and even repeat buyers do not make a 20% down payment. For new buyers, the average down payment is just 6%. Today’s assortment of loans makes it possible to put down an amount that will not overwhelm your budget.

It is important to keep in mind that a higher down payment can translate to savings over time. For instance, you will not be saddled with private mortgage insurance (PMI), which is assessed to those who do not put down 20%. PMI can add another $100 or more to your monthly payments, depending on the price of the home, until you hit 20% equity on your home.

Additionally, your interest rate for a mortgage loan may be higher if you cannot put down 20%. Even so, it can be better to keep more money in the bank initially as a first-time home buyer. Unexpected repairs and emergency needs can arise, and you will be glad to have money in your accounts available.

Keep in mind that your payment to your mortgage lender probably is one of many things that will be included in those monthly mortgage checks. For many buyers, payments toward taxes and homeowners insurance also will be included in the overall total.

Be clear on whether your property taxes are included in monthly payments. Otherwise, you may need to pay them separately at designated times during the year. Property taxes can surprise many first-time buyers, so ask your Real Estate Agent to help you understand how much you are being assessed. Factors like your local school district and the state of the economy can impact your tax rate.

New homebuyers can secure financing from several different sources. Your best bet is to visit several different lenders to compare rates. Ensure that your credit score is in good shape and that you have evidence of your financial resources, such as bank account statements, before visiting a lender.

Many first-time buyers opt for conventional loans if they meet the credit score criteria and demonstrate a favorable debt-to-income ratio. FHA, USDA, and VA loans are other options to consider. With USDA and VA loans, you do not need to make a down payment, but you will need to meet other location-specific criteria.

As a new homebuyer, it always helps to set aside time for more structured forms of real estate education. A homebuyer education course can set you up for success and demystify the process. You can gain an in-depth understanding of the financial implications of making a purchase and, in doing so, plan your budget more effectively. Some mortgage lenders require taking such a course, but you should look into one even if that is not the case for you. Many courses walk you through the steps of buying a house and will also go over the challenges of homeownership so you will know what to expect.

As a first-time home buyer, you should educate yourself on the essential steps in the process first. Even with more knowledge at your disposal, you still will want some help along the way. Partner with an expert Real Estate Agent who can answer questions and listen to your needs. They will know the neighborhoods and help you maximize your budget. Most importantly, a skilled agent will have the negotiation skills to arrive at the best deal.

Turn to M.O.R.E. Homes when you are ready to begin your journey into homeownership. Agent Michael Osborn always puts clients first and uses the latest data to inform housing market decisions. Even if you are a new buyer just embarking on your journey, contact Michael when you have questions or want to explore the Prescott market.

_{*Header photo courtesy of Shutterstock}