Tips For First Time Home Buyers
Buying a home is one of the more significant milestones in life…right up there with getting married or having children. Although an exciting milestone, it’s often put off longer than necessary simply out of overwhelm. The truth is, buying your first home can be a breeze, and sometimes also more affordable than you might think…when you take a few simple tips into consideration.
Get your credit in check…and keep it in check. While it’s not necessary to have a pristine credit history to qualify for a loan, a healthy credit score often comes with a smoother approval process and more favorable interest rates. If your credit is struggling however, don’t get discouraged. Some loan options allow credit scores as low as in the mid-500 range. Regardless, if your credit could use a little TLC, your loan officer can gladly offer suggestions to help make quick improvements that can raise your score and get you back on the path to home ownership.
Before you even contact your Realtor, get pre-approved. This is important for a number of reasons: First, it allows you to identify a realistic budget, saving you and your Realtor valuable time in your home search. Your lender may also be able to provide you with loan options you might not otherwise be aware of, including ones that offer down payment assistance or reduced interest rates, saving you money and potentially increasing your overall budget. Getting pre-approved also gives you more buying power should you want to put an offer on a home that already has a lot of buyer interest. In this case, you’d be able to submit your offer much more quickly than if you had to wait for pre-approval. Of course, this doesn’t guarantee the seller will accept your offer over others, but knowing there is already an offer in place can sometimes be enough to deter other interested buyers, ultimately giving you a leg up.
It’s important to understand down payments and closing costs, specifically how much you should expect to pay for each. Your lender can break down these costs for you, and should be happy to explain what each of them mean, should you have any questions. A portion of these costs can sometimes be negotiated on your behalf by your lender and Realtor, but this isn’t always the case. Your lender will be able to tell you how much you’ll be required to bring to the table, but its always a good idea to have reserves saved beyond that as well.
After You Sign The Dotted Line
One common mistake first-time home buyers run into is saving just enough to cover down payments and closing costs, without accounting for the various other potential expenses that arise after you’ve signed the dotted line. This may include moving expenses, storage costs, utility deposits, or even just the small things needed to make your home yours that can add up quickly- like garden hoses, if you’re coming from a home that didn’t have a yard before, or curtain rods and drapes, if you’re buying a home that happens to have a couple extra windows than your previous house or apartment did. These all seem like small-budget items, but you may be surprised how quickly they can add up.
Don’t Stress It
Buying your first home is a learning process, and one that a good lender should be more than happy to walk you through, answering any questions you may have along the way. When in doubt, always ask! Your loan officer will be glad you’re interested in the process, and are dedicated to ensuring it goes as smoothly as possible from start to finish…so you can begin your happily ever after.