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Top 10 Tips for the First Time Home Buyer

Being a first time home buyer is exciting! But at times, it can also be overwhelming and it is hard to know where to start. It is important to do your research to avoid making an impulsive purchase that can hurt your financial goals. We’ve put together a few tips to get the ball rolling on your first home purchase!

1- Get a copy of your credit report.

When applying for a mortgage loan, your credit will be one of the key factors in whether you’re approved, and it will help determine your interest rate and possibly the loan terms.

2- Improve your credit score.

According to nerdwallet.com, if the initial credit report produces any errors that could drag you down. You can work to resolve these issues before you move forward.Look for opportunities to improve your credit, such as making a dent in any outstanding debts. To keep your score from dipping after you apply for a mortgage, avoid opening any new credit accounts, like a credit card or auto loan, until your home loan closes.

3- Get pre-approved with a mortgage broker or lender before house hunting.

You can get pre-qualified for a mortgage, which simply gives you an estimate of how much a lender may be willing to loan based on your income and debts. As you get closer to buying a home, it’s smart to get a pre-approval, where the lender thoroughly examines your finances and confirms in writing how much it’s willing to give you, and under what terms.

4- Pick the right type of house and neighborhood.

There are so many options and it is important to think about your personal needs. Make sure you find out whether there are amenities and homeowners fees with the property. Also look at nearby schools, safety and crime statistics, the local community and nearby stores, hospitals and any other stores you will frequent.

5- Know your down payment options.

It’s common to put 20% down, but many lenders now allow you to do much less. First-time home buyer programs allow as little as 3% down. However, putting down less than 20% may mean higher costs and paying for private mortgage insurance, and even a small down payment can still be hefty. For example, a 5% down payment on a $200,000 home is $10,000. There are many down payment calculators available online to help you land on a goal amount. DOWN PAYMENT CALCULATOR

6- Hire an experienced real estate agent.

This is where we come in! The right buyer’s agent should be highly skilled, motivated and knowledgeable about the area. You can check out our experience on our website and contact us here.

7- Budget for all home ownership costs.

Look at properties that cost less than the amount you were approved for. Although you can technically afford your preapproval amount, it’s the ceiling — and it doesn’t account for other monthly expenses or problems. Think about a broken dishwasher that could pop up, especially right after you make such a big purchase! Shopping with a firm budget in mind will also help when it comes time to make an offer.

8- Know your debt-to-income ratio.

Before you start looking for your dream home, you need to know what’s actually within your price range. According to consumerfinance.gov, studies of mortgage loans suggest that borrowers with a higher debt-to-income ratio are more likely to run into trouble making monthly payments. The 43% debt-to-income ratio is important because, in most cases, that is the highest ratio a borrower can have and still get a qualified mortgage.

9- Check first-time home buyer programs and grants.

In addition to federal programs, many states offer assistance programs for first-time home buyers with perks such as down payment assistance, closing cost assistance, tax credits and discounted interest rates. Your county or municipality may also have first-time home buyer programs.

10- Know the types of loans available.

There are a lot of mortgage options out there, each with their own combination of pros and cons. A few loan options include conventional mortgages, federal housing administration loans and Veterans Affairs loan. A well versed mortgage broker or lender can help you to understand the differences and qualifications.

Let us know if we can help! CONTACT US

Filed under: Blog by Erin Hudson