Tips for First-Time Homebuyers
First things first - Congratulations on deciding to become a home owner! You've made a smart decision by joining the millions of people who invest in their future and build financial security through home ownership. We're sure you and your family are excited to begin this next chapter in your life! Here are a few tips to have a smooth process so you can stay happy!
Preparation is Everything
Here's the truth - whether you’re a first-time homebuyer, or this is your 10th home, the process can be stressful! If you feel anxious or stressed out, you aren't alone! The real estate market is always evolving with ebbs and flows along the way. As a result, lenders offer a variety of mortgage options for a variety of needs. It's important that you know which is the right product for you and your situation. Here are some of the most important things that you should do when you are a first-time homebuyer. Even if you have purchased a home before, think of this as an important reminder to put yourself in the best possible position of a successful home purchase.
Talk to Friends and Family
Referrals from friends and family who have had a good experience with buying a home can be a huge plus! Gather a variety of advice and opinions, but be sure to make your own informed decision. Ask someone who has recently purchased a home for their first-hand experiences in the process. What worked and what didn’t. Most importantly, ask for recommendations on proven experts in the real estate market who can guide you through the process.
The internet allows you to find tons of information about a variety of homes that are available, different types of mortgage programs, the best lenders, etc.. You can also find a plethora of consumer reviews of service providers and real estate agents online. The internet also allows you to browse homes available from of the comfort of your couch! This allows you to attend virtual showings so you can reserve in-person visits on the homes that interest you most. Looking at homes online and researching real estate agents provides a great, no-pressure way to identify what you like and don't like about the options available.
Get Help From a Professional
A short, fifteen-minute conversation with a real-estate agent or mortgage lender can make a huge difference. Talking with an expert who is well-versed in the local home buying process will give you great insights. When you are starting your new home search, call several local mortgage lenders to learn about current mortgage rates and incentive programs they offer. There are also many first-time buyer programs to ask about as well. If you are a first time buyer, you may also be eligible to participate in various programs that provide assistance with the down payment or closing costs.
Don't Stop at the First Home You See
First-time home buyers often fall in love with the first home they see. But the emotion and realization that this home could actually be theirs is oftentimes overwhelming! Of course, it doesn't mean you can't buy the first home you visit, but make sure you compare your options. By viewing additional houses, you are more able to identify the features, neighborhoods, and price points to determine what is most important to you. Having a variety of homes to consider will help you make a decision that will avoid questioning if you really bought the right home. The point is, get educated on your options and then go for it with confidence!
Review Your Debt to Income Ratios
This is a simple, but necessary understanding of how much you make vs. how much you spend. Mortgage lenders will study this closely when qualifying your for a loan. The debt-to-income ratio represents your monthly payments compared to your average monthly income. Most lenders will prefer your debt is no higher than 20% of your net monthly income. If your debt is more than 20% of your income, you’ll want to pay down some of the bills you have. This will allow a much smoother process in qualifying for a loan.
Clear Up Credit Errors
Knowing your credit information is essential to a smooth home purchase.
It’s better for you to know what’s on your credit score and fix it before someone else alerts you to the problem (and it hurts your chances of home ownership.) Review your credit report through the top three providers and verify that the information is correct. If there is an issue, submit a correction request through their website. Note, they are required by law to examine any reported errors on credit reports, and to correct them if necessary. Remember, this process can take a while, so move as quickly as you can to resolve things quickly!
Get Pre-Approved for a Mortgage
Home sellers are much more likely to sell to a buyer who is pre-approved! A pre-approval shows the seller you are serious about the home and allows you to lock in a low interest rate. Working with a lender as soon as possible will help you determine your situation and what type of mortgage is best for you… which will give you a better idea of what type of home you will be able to afford. Less stress, more information, and a solid plan will help you know what to expect every step of the way!