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
If these are viable options, make sure you understand the pros and cons for each down payment option.
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!
very helpful and impressive content for those who want to get their feet on the housing ladder.
You make an excellent point when you mentioned how you should have good credit before applying for a mortgage loan. Now that my wife and I are both employed, we would like to purchase a home so that we can start a family, but we have not checked our credit for a few months. Maybe it would be best for us to ensure that we have good credit before we get a home loan.
You make a good point when you mention how you should consider what kind of house you can afford in addition to additional expenses like closing costs. My wife and I recently inherited some money from her late father, and we would like to find a luxury property with multiple rooms so that we have room for the children that we plan on having, but we need to make sure that we find something we can afford with both of our current incomes. We’ll make sure to look at what is within our price range when we search for a home.
Thanks for the advice of paying a down payment of 20% of the home price. It’s good to know that getting a pre-approved letter from a lender would help out in the process of buying a new home. My wife and I just got married a couple of weeks ago and we plan on starting our life together, but first, we need a home that is both affordable and based on our preferences. Hopefully, we can find a good real estate agent that could lead us in the right direction.
Thanks for mentioning that your credit score will help determine your interest rate and mortgage loan terms. My husband and I are thinking about buying our first house so that we can have a place that is all ours. We will have to make sure that we get our credit up and check it regularly so that when we apply for a mortgage loan we can get the best one possible for us.