First Time Home Buyer Guidelines
Buying a home is an exhilarating yet intimidating process for anybody, but especially for those who are purchasing one for the first time. With all the information out there, it’s hard to determine what advice will help make the process as painless and rewarding as possible. Here are some great tips to get you started on your journey to buying your first home.
- Set a budget to decide what you can comfortably spend. Be sure to include the costs for utilities, homeowner association fees and private mortgage insurance (PMI). You will also need to include closing costs, which typically run 5-20% of your purchase price, and the principal, interest, taxes and insurance (PITI) which will be a reoccurring monthly cost. There will also be other miscellaneous costs which may occur during the buying process, like moving expenses or the prices of any unforeseen repair or improvements to the home.
- Research your mortgage options. Decide which ones are the best for you. You may choose to use a fixed-rate mortgage or an adjustable rate mortgage. There are also alternative mortgage options like VA loans and FHA loans. IF you need mortgage financing quickly and want to avoid all the red tape of a traditional lending institution, consider a hard money lender. Some sellers also prefer to take an all-cash option rather than wait for the approval of a VA or FHA loan and if you find yourself in that situation, consult a direct lender.
- Know your credit score. Use the FICO website or contact a credit bureau to obtain a report. Be sure to fix any errors you find. Mistakes can easily happen when people make clerical mistakes, or reports are filed mistakenly under someone else’s name.
- Find a responsible lender. This is a key part of your home buying process. Ask around for recommendations and choose a lender who is willing to put your needs above their own and who will take the time to explain the lengthy lending process to you in terms you can easily understand.
- Get prequalified for a mortgage before you start shopping for a house. Doing this will help you to set your budget and be competitive in a fast-paced market. It will also help you understand where you stand financially before you begin the process of purchasing what is likely the biggest investment of your life.