Buying your first home tends to be a learn-as-you-go process. From finding the right property and builder, negotiating a price and securing the finances to pay for everything it’s a long arduous process for most. But it doesn’t have to be.
Before embarking on your very own home buying journey, make sure to take a look at these do’s and don’ts so you can avoid all the headaches we’ve had to.
Don’t even think about starting to look at homes until your financially prepared to do so. First things first, credit score. Your FICO Score greatly affects the type of loans you qualify for and its interest rate.
Here are some ways to boost your credit score quickly:
– Timely payments- rent, car loan, cell phone, credit card, etc.
– Debt across multiple credit cards? Better transfer it all to a single credit card with the lowest interest rate.
– Increasing your credit limit or keeping a low balance on a new card will improve your spending ration, bumping up your score in the process!
A lot of lending offers can differ on a 30-year fixed rate mortgage by nearly half a bot, checking this online is only the first step. Talking to a loan officer and getting a Loan Estimate disclosure gives you current interest rates and fee commitments from lenders that they must honor.
Save more than you need
Right now, your down payment, which can range from as little nothing (USDA or VA loan) to 10% or 20%. (get an up to date estimate here)
Most homeowners think that is the end of it, there’s also:
– Closing cost, potentially totaling about 3% of the home’s purchase price.
– Homeowner’s Insurance.
– Potentially 2 months’ worth of mortgage depending on your lender.
– Utilities can’t have a home without water and electricity.
Pre-approval guarantees that you are shopping for homes in your price range, but also speed up the process once you find the right home. Due to Federal regulations guidelines as to what a lender can send to a non-qualified applicant.
Big credit card purchases before closing
Now, your offer is accepted, and you can practically feel the hardwood floors of your new home. Of course a celebration is in order! But celebrating by buying a brand-new post modern living room set with your credit card is a big no no. Before you officially close your mortgage lender will recheck your debt load and if it goes up, you are seen as more at risk to make your mortgage payments.
Best to play it safe, besides, your better off saving the extra funds in case of emergencies.
Sometimes, not often, buyers will have the good fortune to find a better paying job thinking that it won’t affect closing on the home of their dreams. Wrong! Most lenders require 30 full days of pay stubs, so changing jobs will delay closing another 30 days until the paperwork is obtained. In some cases, it can end the deal altogether!
Cave in to pressure
Finally, don’t sign any documents you don’t understand or feel uncomfortable with. Ask plenty of questions, and if you don’t understand the answer be sure to ask for a better explanation. A real estate agent or lender is there to help you and not push you into something you’ll regret down the road. At the end of the day, you’ll be living and paying for that home for many years to come.
Ready for your first home?
Taking that first step towards purchasing your first home can be quite scary. Very few home buyers take the time to study the housing market or read up on mortgage interest rates to make a calculated purchase. Wherever you are in your home buying journey, just remember that millions of others were in the same boat and survived!
Make sure to ask questions and work with a trusted professional that can help you make the correct decisions. Feeling prepared now? We’re happy to walk you through it all, from home to close we’re always in your corner. Start the process here.