Buying the first house is an emotional and financial event. Now is the best time for you to own your own house, no matter how long you save or rent. If you are a first-time home buyer, here are some tips to help you complete the process smoothly:
Do: Do a credit score check
One of the most important factors in obtaining financing for first-time home buyers is your credit score. A good job and a substantial down payment are helpful, but your credit score may prevent you from buying the ideal home. Therefore, it is important to understand your score before starting the procedure, and it is also important to take appropriate measures to improve your score or report inaccuracy. Do you and your partner pay the down payment for the house together? If your combined income is used to approve your mortgage, your spouse's credit score is critical.
Don't: underestimate the cost.
Considering only the mortgage amount when making a house budget can lead to unpleasant surprises when the bills start to appear. To get an accurate figure, consider the possible fees charged by taxes, homeowners’ insurance, maintenance, utilities, and homeowners’ associations. The best thing you can do is to overestimate your financial obligations so that you are not caught off guard.
Do: Use available mortgage and financial assistance resources.
You are lucky because there are many financing alternatives and plans for first-time homebuyers. For first-time homebuyers, FHA loans are an attractive option because they only need a 3.5% down payment and a credit score as low as 580. First-time home buyers can take advantage of programs that help reduce transaction costs, provide tax rebates, and provide benefits such as low-interest mortgage loans.
Don't: postpone the down payment beyond the minimum.
If you have enough funds, please don't just pay the minimum down payment required by the loan plan. You still need to pay the full purchase price of the house within the same time period, plus interest. Although a reduction of 5% instead of 20% may seem like a good deal, you will end up paying 95% instead of 80% of loan interest.
Do: Investigate a few different loan providers.
All rates are equal, and going with the first one you see may cost you a lot of money. The Consumer Financial Protection Bureau estimates that looking around for the best price can save you more than $3,000. Before you decide to borrow money, learn more about the lender's customer relationship and reputation, as well as transfer costs and any possible discounts. For all mortgage applications made within the 45-day period, a credit inquiry will be recorded.
Don't: Find a house before applying for a loan.
If you start your family hunt based on the amount you think you can afford, you will let yourself down. Many people don't want to lose the excitement of opening houses and searching for Zillow and Redfin while waiting for pre-approval. Finding an ideal property worth millions of dollars is one thing, but losing it to someone else because there is no loan pre-approval letter is another thing? Before going on a hunt, make sure you have obtained pre-approval.
Do: Have a buyer's agent.
The best thing for real estate agents is that the seller pays their fees and commissions, not the buyer; therefore, working with them is free. Sometimes, listing agents want to work with buyers to help their sellers complete transactions without sharing the commission. The disadvantage of this is that it is unfair: can you trust the real estate agent to take your interests at heart and reveal to you any potential problems with the property? This can be avoided by working with buyer agents who are familiar with the community and comparable sales.
