First Time Home Buyer Tips

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Navigating the home buying process can be overwhelming- especially if it’s your first home. The home buying process is complex and can take several months depending on your credit history, savings, and the housing market that you’re in. These tips will help to smooth out what can be a bumpy home-buying ride. Another great article for first time home-buyers is, How to Buy a House in Hawaii.

1. Start Saving Early

Having enough savings to cover 20% of the cost of your home can save you a ton on mortgage insurance and lower your interest payments. If saving 20% seems impossible- first time home buyer programs are aimed at making it easier for folks like you. Check out our article on First Time Home Buyer Programs. You will also need cash to cover closing costs and any expenses needed to make your new home move-in ready.

2. Check Your Credit Early

This is also a great time to check your credit score and see if you may be able to bump it up a bit. A small improvement in credit could mean huge savings over the length of your loan. You can check your credit score for free and without impacting your score here. Experian also has a credit boost program that uses your bill payment history to boost your score. Some tips for improving your credit score are to pay all your bills on time and keep your credit card balances as low as possible. Patience is the key here. It took time to get your credit where it is today and it will take time to improve it as well.

3. Determine How Much Home You Can Afford

Check your monthly budget to determine how much you can afford to spend on a new house. A good rule of thumb is to make sure your monthly housing costs (including HOA fees, taxes, and insurance) don’t exceed 25% of your monthly take home pay. Here’s a nice mortgage calculator to get an estimate of what homes are in your price range.

4. Shop Around For a Mortgage

Request loan estimates from multiple lenders so you can compare the fees, interest rates, and origination fees. This may be the largest single purchase you make in your life. It’s worth comparing your options. Be aware that each time a lender pulls your credit report- there may be a small dip in your score. Try asking for an estimate of rates without giving the lender your social security number. And only formally apply for the loan once you pick the lender you want to go with.

5. Get Pre-Approved

A pre-approval letter signals to home sellers and real estate agents that you are a serious buyer. This can be a real advantage when you are ready to make an offer on a home.

6. Choose a Real-Estate Agent Carefully

Your real-estate agent is your guide through the home buying process. A good real estate agent can answer your questions about everything from school districts to home inspections and will help to steer you toward the home of your dreams. Ask your friends and colleagues for recommendations.

7. Don’t Pass on The Home Inspection

Some lenders will require a home inspection but don’t pass on it even if your lender doesn’t ask for it. A home inspection will tell you things about your house that even the previous owner may not know. How is the electrical system, the septic, the plumbing, the roof? Any of these things can mean major expenses that you need to be aware of before you pull the trigger on a sale. This step can save you from buying a lemon.

8. Price Negotiate

If anything turns up funny in the home inspection report or the seller disclosure, now is the time to negotiate. The seller may be willing to repair anything that you aren’t happy with or give you a discount to cover the cost of making those repairs. At the end of the day, you are the one that has to pay for this home so make sure you are happy with the purchase you make and the final price.