Taking that first step to owning a home can be a nerve-wracking process, but luckily there are professionals to help guide you through. Here are some quick tips when becoming a first-time home buyer that you can implement on your own:
Save for a downpayment:
Nearly all mortgage loans and lenders require some amount of cash as a down payment. The amount you've set aside for this will determine the kind of mortgage you qualify for. It will also impact how much you can afford to borrow for a home. Be adamant on setting aside money each month in order to reach your goal!
Compare mortgage lenders:
Shop around for a mortgage and compare! Set aside some time to make a few inquiries and tell the truth to the best of your knowledge about your personal finances. Mortgage quotes can vary based on your down payment, credit history, income, assets, and debt.
Get pre-qualified:
At this point, you've saved for a down payment which will determine the type of mortgage load you can pursue. If you've compared a few rates you can go ahead request a pre-qualification letter and get approved. In today's competitive housing market, it's not uncommon for a seller to receive multiple offers on their home. Having a pre-qualification letter could make the difference in being able to buy the house you desire.
Consider what you can afford:
Consider Your Income: Many banks will require that your monthly costs can't exceed a percentage of your income.
Consider Your Debts:
If you have recurring debts, the total monthly payments on existing debt plus new payments for your mortgage may not be allowed to exceed a certain threshold. Pay down or pay off debts within your means as soon as possible to put you in position for the best rates.
Consider the Down Payment: Several loan types allow a smaller down payment amount such as FHA, GSE, USDA and VA.
(The fun part) Find the right home for you:
All of the financial work you put in is about to pay off! Here are some things to consider when determining which property is right for you:
- How big is your family? Is a single-family home a requirement or is a condo an option?
- What neighborhoods are you willing to consider?
- Are schools a factor?
- Based on your income and assets, what kind of home can you afford?
All home buyers have priorities when it comes to selecting a property. Ideally, you’d find the home you desire in your neighborhood of choice, at a price you can afford. Realistically, most people will have to make some compromises. Remember, your first home does not have to be your forever home!
