Buying your first home is an exciting milestone! First time homebuyers may find themselves rightfully overwhelmed and unsure where to begin. Here are some helpful tips to get the ball rolling on your first home purchase.
Are you in a good financial position to buy a home? When done correctly, owning and buying a home can potentially be more financially lucrative than renting. However, not everyone who wants to own a home is in an ideal position to own when they first begin looking. Review your finances and decipher if buying a home is in your best interest.
Get familiar with your credit score. Your credit will ultimately play a significant role in your loan process. A low credit score will be a red flag for reputable loan companies. A favorable credit score will not only help you in matters of homeownership, but various loans you will come across throughout your life. If you are looking to own any sort of property, work on securing a good credit score. This may mean holding off on buying a house. On the contrary, if your credit score looks ideal and you’re ready to apply for a mortgage, avoid the threats of a lowering score. Until your home loan closes, it is best to avoid any new credit card accounts or auto loans.
Get a REALTOR ®. Whether you’re a seasoned homebuyer or new to the process, going the realtor route will help ensure a seamless experience. REALTORS are well versed in the logistics of the buying process and may have quick access to homes that are about to hit the market or have just barely hit the market. If your friends or family members have recently moved, use them as a resource to get recommendations. Some REALTORS may be better suited for your needs than others, so ask around.
Let’s talk mortgages. There are several financial aspects about the homeownership process that newcomers may not fully understand. The homebuying process usually involves getting a mortgage. Mortgage payments include principal and interest, closing costs, taxes, homeowner’s insurance and possibly mortgage insurance. Some homebuyers aim to put down roughly 20% on a down payment. There are down payment options available for you to explore, including some with no down payment or low down payment. At Citywide, we will be happy to sit down with you and go over your options and get you pre-approved. You are always welcome to shop around and set up consultations with other loan officers and mortgage companies. Look for reputable companies that will help guide you efficiently through the process with a personal touch.
Do you qualify for any assistance programs? Assistance programs can make a notable difference in your payment requirements. One group who can significantly benefit from assistance programs are veterans. If you are a veteran, be sure to make note of your military status to your loan officer, or mortgage broker. In doing so, you can surpass the down payment process entirely. Additionally, there are often state or federal programs that first-time homebuyers may qualify for. Some specific counties may even have first-time homebuyer programs. Speak with your loan officer to find out your options.
A pre-approval letter may be in your best interest. With any sort of large investment, it never hurts to get things in writing. In certain circumstances it is possible to get a letter of pre-approval by your lender. A pre-approval letter is written by the lender, where they outline the terms and conditions of your loan, and exactly how much they are willing to invest. If you bring the letter to certain sellers, they may take your offer more seriously.
Once you have your ducks in a row financially, you can begin the search for a home. What are you looking for? Common considerations are as follows:
- Number of bedrooms and bathrooms
- Style of the home
- Size of the yard
- Do you want pets?
- Space for a family or plans to start a family in the future.
- Proximity to hospitals and good schools (even if you don’t have children, schools effect home value)
- Overall culture of the neighborhood (noise level, activity level, median age of residents)
Looking online can help you find areas that are typically in your price range, and offer the amenities you are looking for in a house. Just like the area you live in, you want to make sure your potential house checks most of your boxes. Being flexible never hurts, but it’s advisable to make a list of things you will not compromise on.
The second phase will involve more research. These tips are mostly preliminary for safeguarding that you are in a lucrative position to own a home. Remember to reach out to your real estate or mortgage professional if you have any questions or concerns. Buying a home for the first time can be a stressful and emotional process and communication with those helping you is key.