5 Tips For First-Time Home Buyers
By Sammi Foss
Thinking about buying your first home but don’t know where to start? Well you’ve come to the right place! The home buying experience can be stressful and draining, especially if you’ve never been through the process before. That’s why we’ve compiled five tips that we believe are crucial to having a positive and successful experience when purchasing your first home.
Start Saving Money For A Down Payment
Typically when buying a home you want to be able to put a down payment of 20% of the purchase price, but many first-time home buyer programs allow a significantly lower down payment percentage. This in turn may mean higher mortgage costs and you may have to pay for mortgage insurance. If you are a first-time home buyer who is ready to purchase a home, but don’t have the recommended 20% down payment, see if you qualify for these mortgage options:- Conventional mortgages
- FHA Loans (Federal Housing Administration)
- VA Loans (Veterans Affairs)
- State Assistance Programs
Determine How Much Home You Can Afford
Before you start looking for your dream home, it’s best to know what’s actually in your price range of what you can afford. When calculating your monthly mortgage payment it is important to remember to include any additional costs that could arise. These costs can range from upfront expenses such as home inspection costs and closing costs to recurring expenses such as homeowners insurance and property taxes. Get a head start on establishing how much home you can afford by utilizing these home affordability calculators!Take A Look At Your Credit Score
Knowing where your credit stands before applying for a mortgage loan is very important. A good credit score is key to being approved for a loan and will determine your interest rate and loan terms. If you are buying your first home, check your credit score through your bank or where you won’t be penalized and look for opportunities to increase your score. Whether that is getting a jumpstart on paying on your student loans or applying for a low interest credit card that allows you to transfer over debt that has a higher interest rate.Compare Mortgage Rates
Many first-time home buyers make the mistake of accepting the first mortgage rate quote provided by a lender instead of taking the extra time to shop around for a better rate. As a first-time home buyer we recommend getting mortgage rates from three or more lenders, to completely weigh your options and find out which loan is best for you.Get A Pre-Approval Letter
After you’ve saved your money, figured out your price range, cleaned up your credit and shopped around for the best mortgage rate it’s time to get serious and ask for a pre-approval letter from your lender. Typically, when you are receiving quotes from lenders you are prequalified for a mortgage. This is just an estimate of how much your lender may be willing to lend based on your income and debts. A pre-approval letter is a thorough examination of your finances that leads to a concrete number in writing of what they are willing to lend you along with their financial terms. We hope these tips have been helpful and alleviates some of the headaches that come with your first home buying experience. If you are looking to build or purchase a home through Dream Finders Homes get prequalified with our preferred lender, Jet HomeLoans today!Categories: Blog, Buying New