Just getting situated and thinking about buying a home for the first time is intimidating. Use these tips for first-time home buyers guide and be on the know before going around and looking for a home.
With all the how-to in Social media, overwhelming and confusing is an understatement. Where to start is like climbing a mountain.
Here are the basic guides to help you navigate thru the process without the big words that agents and banks would use.
Know more when you get a pre-approval, Ask your loan officers so you have the upper-hand when you are shopping around for a house.
1. Be realistic and know what you need.
Do you prefer bars close by and just walking distance away or opt to have a quiet quaint suburban neighborhood and walk your dog around the block?
Consider your current lifestyle, the goal here is to lessen the stress of transition from a renter to a full pledged home owner.
Base your decision on your current payments. See if your current rent right now is comfortable.
Developing the habit is a realistic way of testing your financial standing.
Let’s say that your rent is $1800 and your estimated mortgage payment is $2000. Test how this goes for a quarter and see if you’re comfortable with it and your response will determine if you move forward with the purchase.
Check this financial calculator and see where else you can save and boost your saving and credit score in the long run.
2. Location, location, location
You’ve heard that one before, right? For many first-time home buyers, it’s all about where a house is – the part of town, the neighborhood, the school district.
When deciding between houses, it’s a good idea to consider which location has the best chance to help increase the value of the home over time.
Property Profile Reports gives you detailed information about the home that you are trying to buy. From school district, property upgrades and historical value of properties, similar to the house that you are searching for.
3. Don’t rush and get pre-approval for a mortgage loan.
Take your time to look around. Are you personally ready? There is a rule that lenders need for to pre-qualify you for the amount that you can afford at the moment of your application.
Remember these rules and the documents that the mortgage lender will need with your application:
- 2 years of consecutive tax returns
- 2 years of consecutive W2s
- 2 consecutive paystubs
- 2 forms of government ID
It may be excessive but if you gather this document upon application, you’ll gain the upper hand on negotiations when it’s time to make an offer. Realtors prefer borrowers that are pre-qualified.
4. Down payment is real!
Think of a down payment as an investment. It may seem intimidating, but it could be one of the wisest decisions you make as a first-time home buyer. To get real with it there are several loan programs that will accept variations of down payment.
Popular programs have minimums requirements 3.5% (FHA) to 20% (Conventional) down payment.
FHA home loans that are geared towards first-time homebuyers that can go as low as 3.5% down. Consider another 1.75% of your loan amount for Mortgage Premium insurance, this is the catch with this type of loan program.
The premium is divided by 12 months paid as an addition to your monthly mortgage payment.
Another popular loan is Conventional mortgage loan. This requires the 20% down payment and doesn’t have the required mortgage insurance like the FHA loans.
5. Know different loan programs
There’s more than one way to finance the home of your dreams. While a conventional 30-year fixed mortgage is the most popular type of loan these days, it’s certainly not the only option. Do your research and find the loan that fits your needs.
Hopefully these tips for first-time home buyers gives helps you to a better path forward in owning a home. If you have the savings and financial stability search for a lender that address’ your concerns and is patient enough to answer your questions.