5 Tips For First-Time Home Buyers

Written by Posted On Sunday, 22 October 2017 12:58

Home buying can be an immensely stressful time. Not only is it one of the largest purchases you’ll most likely ever make but the process can be complicated and include unforeseen expenses. Here are a few home buying tips that will help facilitate this overwhelming process.  

 Calculate Your Monthly Housing Costs

 Your monthly housing cost will include home insurance and property taxes. You can get an estimate by picking a property in the area you would like to reside and contact an insurance agent for an estimate. Checking your county’s property appraiser’s website will allow you to get an estimate on property taxes. In addition to these costs you may also want to include maintenance and repair costs and HOA fees if you decide to purchase a condo.

Get Your Credit In Order

A low FICO score and negative credit items can affect your ability to obtain a home loan. Order a copy of your report from the three credit bureaus; Transunion, Equifax and Experian. It is necessary to order a report from all three agencies since they are independent and may have different information on file. You will also want to get your FICO score.  

Check your credit report for any inaccuracies. For example, if you’ve paid off an account and it’s still reflecting a balance you’ll want to have that corrected since this affects your debt-to-income-ratio. File a dispute with the credit bureau for any inaccurate items and contact the creditors in question to make sure they update accordingly.

Stop Applying For Credit

Now is not the time to purchase a new car or open a new credit card account. Applying for new credit results in the lender pulling your credit report which counts as a hard inquiry and lowers your score. Taking on more debt will also increase your debt-to-income ratio which is a factor considered by mortgage lenders when evaluating applications.    

Research Different Funding Options

There are numerous mortgage options available based on profession for teachers, police officers, veterans and farmers. Janie Sharp, owner of The Sharp Team, a Truckee California real estate firm says: “Specific home buying programs may be available if you intend to purchase a home in a rural area. USDA home loans offer zero-down payment mortgages in certain rural and suburban areas. If you’re a veteran you may want to consider a VA mortgage which offers the benefit of opting out of mortgage insurance, allowing you to purchase a more expensive home.”  

Consider A FHA Loan

If you’re finding it difficult to get approved for a traditional home loan, you may want to consider applying for a FHA loan. This program was designed by the government to assist first-time buyers. Loans are insured increasing the chances that a lender will approve your application. In addition, the down payment required under this program is just 3.5% making home ownership very feasible.

Factor In Closing Costs

The Sharp Team’s co-owner Kristie Hood says “Closing costs can be significant and may include title and settlement fees, taxes and origination fees. Home buyers spend on average anywhere from 2-5% of their home’s purchase cost on closing fees.”

Ask your lender for a Loan Estimate, which will include the closing costs of your new home. Some of these fees are negotiable and may vary from lender to lender so shop around in order to find the best deal.  

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