It’s one of the most important times in a person’s life. It can also be a pit of problems without proper preparation and foresight.

Thinking of buying your first home in 2020? A forecasted 5.46 million people will be doing the same across the country, but real estate insiders predict a tough year ahead for first-time homebuyers.

Some say there’s a shortage of starter homes which, when combined with lower interest rates, is likely to create serious price pressure for housing hopefuls. New Yorkers need solid advice before entering this competitive market to help them make the most cost-effective decision now and for the future. Here are the right moves to make before moving in—especially when it comes to finding affordable homeowners insurance.

Exercise some neighborhood know-how

Zipcodes contribute strongly to both home prices and insurance premiums for a property. First-time buyers may not land their dream neighborhood, but it always pays from a coverage point of view to research any area you’re considering. It may seem like a good deal now, but it could cost you later.

Crime rates are a key metric for setting home insurance premiums and resources like the NYC crime map and Neighborhood Scout are good for risk assessment. Listings like those on Niche and Street Advisor grade neighborhoods around New York on factors like cost of living, school quality, job opportunities, and more.

Of course, nothing beats some on-the-ground research of your own. If you’re able to visit the neighborhood in person, do so at the safest time of day and do it more than once. Not only is this a good way to test the commute, but it will also offer a real-life view of things a real estate agent may “neglect” to mention such as noise levels, foot and vehicle traffic, neighborhood behavior, and other quality-of-life factors.

Improve your credit score

This is universally good advice and it can really help when buying your first home. Mortgage lenders use FICO scores to determine how risky a first-time homebuyer’s credit profile is, but not every home buyer knows that they have 3 FICO scores—one each from TransUnion, Equifax, and Experian. If a couple is applying for a mortgage, then lenders will typically consider the lower of the (at least) two scores that they check.

First-time buyers should know their FICO score before starting to plan because building credit and paying off debt is a vital first step toward success. Free resources like Credit Sesame and Experian Boost offer easy-to-understand tools that reveal your current credit score and ways to improve it. Credit may well be the factor that makes or breaks your home search. It’s even more crucial if you have your sights set on more exclusive addresses.

For example, buying in NYC is a goal for many New Yorkers and those from further afield. While living in the Big Apple can be great in many ways, it’s an idea which first-time homebuyers should seriously contemplate before committing to it.

Why home buying is tougher in New York City

When finding a new home is tough all over, it’s always tougher in the city. More people competing for living space means higher home prices—especially if that city happens to be one of the major global hubs. An article by Christina Caron in The New York Times highlighted the financial and personal sacrifices being made by first-time homebuyers looking to settle in NYC, many of them high earners.

The article also highlights data from Social Explorer revealing that once NYC homeowners move in, they tend to stay put. Over 70 percent are still living in the first home they bought, with over 50 percent of those individuals having purchased in 2000. Real estate watchdog Redfin gives a reason for this: the average New York homeowner is an aging demographic. They’re quite happy to stay in their homes, and first-time buyers can’t grab what’s not for sale.

The overarching advice is to save prudently and cut every possible financial corner to afford that first home. The good news is you may not have to finance it alone. We’ve assembled a few first-timer funding options which may make things a little (or a lot) easier.

The financial aid available to first-time homebuyers

  • NYSARAwards statewide first-time homeowner grants toward down payments or closing costs
  • AHP Down Payment ProgramsOffering multiple grants, loans, and incentives for new homeowners in regions around New York
  • State of New York Mortgage AgencyProvides down-payment help and has no credit score requirement for its mortgage programs
  • HomeFirst Down Payment ProgramEligible NYC home hunters could receive up to $40,000 toward down payments or closing costs.

All that possible funding means first-time homebuyers can save some money. You’ll likely be required by your lender to have a homeowners insurance policy, so make sure you get the right one.

Read our previous blog to learn more about how homeowners coverage works and don’t hesitate to contact the NICRIS team with any other questions.

NICRIS Insurance focuses on providing clients with the appropriate suite of products to protect them, their interests, and their loved ones. If you need some insurance advice or would like a free, personalized insurance review, just drop us a line.