Start saving for your down payment now.
One of the main misconceptions is that you need 20% down to purchase a home. This is simply untrue but you will still need to save. Some loan programs require as little as 3% of the purchase price down (we’ll talk about USDA later). Putting 20% down will keep you from having to pay private mortgage insurance (PMI) which saves you money on your monthly payments.
Work on getting your credit score up.
Each loan program has its minimum score to qualify. However, many first-time buyers will make the mistake of aiming just to hit that score. By meeting the bare minimum score, you’re going to pay more in interest than if your credit score were higher. Definitely work on improving your credit by paying off debt or disputing erroneous marks. Also, ask your lender for help. Most lenders are partnered with credit repair companies that can do a lot of the heavy lifting for you and get your score to where it needs to be.
Find an awesome lender that works well with first-time buyers.
Going local with your selection of lenders is absolutely imperative. Big banks are often more expensive and you definitely do not get the same service you would with a local lender. I always recommend for my first-time buyers and the feedback I get is outstanding. Tori, and lenders like her, will answer all of your questions and help guide you through the process of getting a loan. Plus, by going with a local lender you’re able to meet face-to-face in their office if needed.
Quality lenders will have many different loan programs and will match you to the best option for your unique situation.
Find the mortgage that is right for you.
There are numerous loan programs available for first-time buyers and it is highly likely you qualify for one of them. Popular options include FHA loans (3.5% down) or VA loans (0% down). If you’re a veteran, a VA loan may be your best option. Don’t have the best credit? Maybe an FHA loan would work for you. Your lender will help you decide how to get the best loan that matches your needs.
Determine how much you want to spend on your new home
Your lender will tell you how much you are approved to spend once you have applied. I always encourage my customers to not spend the absolute maximum as you do not want to be “house poor.” You want to enjoy being a first-time buyer and getting into your next home but you don’t want to worry about making your mortgage payments. Your lender will be able to tell you what your monthly payment will be based on different purchase prices. Find the mortgage payment that works with your budget and we can look at homes that match.
Get your pre-approval ready
Having a pre-approval in hand is imperative before shopping for a home. Not only will you know that you can buy one of the homes you’re seeing but it is customary to include the pre-approval with your offer. This strengthens your offer by showing the seller that you are willing and able to purchase their home. Sometimes, sellers will not even consider an offer that doesn’t have a pre-approval with it so do not skip this important step!
Make sure you pick the right home and hire a home inspector
Let’s face it—shopping for a home is incredibly fun. Seeing the possibilities and picturing your life in your first home is really exciting but don’t fall in love too quickly! Homes can have hidden issues and having a great Realtor® to help you spot these problems is important. For example, a 20 year old home may look great and be fully renovated but it may also have a 20 year old pool that will soon need resurfacing. This hidden cost is huge so make sure you’re not buying yourself a list of problems.
The Realtor® you hire matters
Your Realtor is your guide to buying a home for the first time. You need to place a lot of trust into your agent so pick one that will look out for your interests above their own. I have talked excited buyers out of a sale many times in the past because the home wasn’t a good fit for various reasons. You need that level of service as you make such a big purchase.
Your inspector matters too
A quality agent will have worked with many different home inspectors and will know who to recommend. You will want an inspector that is thorough and knows which repairs will be costly. A great inspector will look over the home and property and then give you the run-down on issues and their potential impacts. Your home inspection is not a place to save money!
Make sure your budget includes all of the costs
Buying a home or condo requires more than just the down payment. You will have closing costs, the cost of appraisal and inspection and other charges that can add up. Your Realtor will be able to get you a closing cost estimate for any home you’re considering purchasing so you will know if it is one you can truly afford. Have this number in hand before you start looking for your next home!
My final thoughts…
As you can see, buying a home for the first time requires a team of professionals from the very beginning. Before you ever see a single home, you’ll need to choose a fantastic Realtor® and select a great local lender. You’ll then need an inspector once you make the offer and finally a title company or attorney to handle closing. This team works on your behalf to make your home-buying journey as smooth and hassle-free as possible. Who you hire matters so listen to your Realtor® and trust their recommendations.
You’ve heard people say, “There’s no such thing as a stupid question” and this is absolutely true for buying your first home. You aren’t expected to know the process inside and out so call, email or text whenever you have a question! The answers will help you set your mind at ease and prepare you for your big move!
Please feel free to call, email or text me with any questions you have before you even start the process. I am more than happy to help.
