Buying a home remains a very popular goal for many Americans. It is also a smart investment that can generate financial benefits for years to come. As a first time homebuyer, you are entering into what can become a very challenging but ultimately rewarding process.
Here’s what you should consider for your first-time home buying journey:
Start Saving for That Down Payment
The days of 0% down payment are at an end. That is not to say that you can’t get a decent mortgage for as little as 3% down. They are out there but might only work for couples with high credit scores and strong work history.
The recommendation by many lending institutions is a 20% down payment. That would be 20% of the entire purchase price of the home. That could be a hefty down payment but keep in mind that the more you put down, the better shape you’ll be in for that loan. All of this means you should be saving in earnest for your down payment.
If you’re planning an expensive wedding before buying that house, then you really need to think it all through. The $30,000 you spend on a wedding could be your down payment. Is it more important for one great day or a lifetime in a home?
Research Mortgage Programs
First-time homebuyers have an advantage over repeat homebuyers. City, state and federal government agencies want to see you become a homeowner. That is always good for the economy on many levels. Because of that, there are many mortgage programs that can help fund your loan. There are also special programs for veterans and for buying home in rural areas. You should look through all these programs to see which ones might be available to you.
Fix Your Credit
As you save and do your research, you also want to improve your credit score. This means paying down debt and clearing up any issues on your reports.
There are plenty of ways to obtain your credit score and to keep track of those numbers. Bumping up your credit score can help get you lower finance rates on your loan. That is always the preferred option.
Get Pre-Approved for a Loan
It helps to be pre-approved for a mortgage loan before you go house hunting. That will provide you with a range of prices that you can look at. It is also a very attractive commodity for a buyer. They know if you’re pre-approved that you’re serious and committed to the process. If they accept your offer, then things can move fast to the closing.
Find the Right Team
Not only will you want to find a reputable lending institution but you also want to find a reliable broker. Yes, you’ll probably do a lot of searching online for a home. However, once you’ve got your “saved searches” you’ll want to bring a broker in on the situation.
Most homes will be represented by a broker. In some cases, the broker can represent you and the seller.
That can help streamline the process and might actually lower the commission. Outside of that, a good real estate broker will know the market and know what is a fair price. They might also be able to show you properties that you won’t find online.
Buying a home is very exciting and the more prep work you do, the better off you’ll be.