tips when buying your first home

While the home buying process can be stressful for anyone, this process can be particularly nerve-wracking for first time homebuyers who may have little to no idea of what to expect. However, doing some homework before you begin your house hunt can help to make the process less daunting and can help the whole thing to run smoother. If you are considering taking the leap by buying your first home, here are just a few home buying tips you should consider before you start looking at houses.

Home Buying Tips for Your Home

Determing What You Can Really Afford

Before you get caught up looking at houses, one of the most important things you should do is to take some time to consider what you can really afford. Take some time to seriously consider your budget and determine what you can realistically afford to spend each month. Be sure to factor in more than just the monthly payments when considering what you can afford. You will also need to factor in the costs of running the home, including utility bills, homeowner's insurance, property taxes, and HOA fees where applicable. This will help to give you a better idea of the price range of houses you should be looking at to prevent you from getting in over your head when buying your first home.

Start Saving Early

Once you come up with a mortgage payment you feel like you can realistically afford, you will need to start saving for a down payment (if you haven't done so already). You will likely need some time to save for a down payment, as it is not common to pay as much as 20% of the cost of the home in a down payment. However, there are many lender and government assistance programs for first time homebuyers that require as little as 3% down, but it is important to keep in mind that the less you put into a down payment, the higher your monthly payment will be. Even a small down payment percentage can still require a large sum of money upfront, which is why it often takes time for people to save up for a down payment.

Take Control of Your Credit

When purchasing a home, your credit is one of the most important factors in determining whether you qualify for a loan and what your interest rate will be, as well as in determining the terms of your loan. This makes it important that you check your credit report early in the process of buying your first home so that you can go into the process aware of your score, and so that you have time to dispute any errors you find in your credit report.

Another one of our home buying tips: if your credit score is lower than you would like it to be, you may want to take some time to pay off a few of your outstanding debts before you begin looking at houses, as this will help to increase your credit score. Once you get your credit where you want it to be and you begin the house hunt, it is important that you limit any new credit activity until after you move into your new home. This is due to the fact that any time you open a new line of credit, such as when you get a new car or open a new credit card, the creditor runs a hard inquiry on your credit, which can temporarily cause your credit score to dip. This dip could make it difficult to qualify for an optimal interest rate. You should then avoid opening new lines of credit during the home buying process.

Remember to Save for Closing Costs

While most prospective homebuyers are aware of the amount they will need to save for a down payment, many people forget to budget for closing costs. These costs often catch first time homebuyers off guard, as they are unfamiliar with how substantial these costs can be. These costs can run between 2% and 5% of your loan amount. You maybe able to limit these costs by negotiating with the seller to pay for a portion of the closing costs; however, it is best to go into the huse hunt prepared to pay them in full.

Research Your Mortgage Options

Once you have your finances figured out, you will want to begin researching mortgage options to see what may be right for you. The fact is that many first time buyers are unfamiliar with the various loan options available to them. You will then want to do some research before buying your first home so that you will have an idea of what will work best for you before you begin meeting with lenders. It is important to meet with multiple lenders before you choose one, as comparing mortgage rates can save you a great deal of money.

Consider Getting Pre-approved

One of our biggest home buying tips is that it is a good idea to consider getting pre-approved for a home loan. In pre-approval, a lender will thoroughly examine your credit history and your finances in order to determine how much they are willing to lend you at what terms, and they will provide proof of this pre-approval in writing. Having this proof of pre-approval is a good idea, as it shows sellers how serious you are in purchasing a home. This gives you a competitive edge over other interested parties.

Find a Good Realtor

One of the most important things you can do when buying your first home is to find a good realtor. A real estate agent is going to be your most important asset to help you locate the perfect home that meets your needs while staying in your price range. They will help to keep the process as simple as possible by taking care of negotiations and filling out paperwork for you, and they can handle any pitfalls you may encounter during your house search. You should then take some time to research real estate agents in your area to find one you'd feel comfortable working with.

Follow These Home Buying Tips and Contact Bellwether Community Credit Union Today

Following these home buying tips can help to make the process of purchasing a home much less stressful for first time homebuyers. To find out more about purchasing your first home, feel free to check out our first time home buyer page, or contact us directly with any questions you may have. We'd love to help you get started with the home buying process!