Tips for First-Time Homebuyers

Home Buying Tips

Buying a home can be an exciting and stressful endeavor. Especially for a first time buyer who isn’t sure how to navigate their way through the real estate market. According to a recent study by the National Association of Realtors that 33% of home buyers in 2014 were first-time home buyers around the age of 30. The market is filled with first-time buyers, and there are steps you can take to stay prepared and ahead of the curve. Visit The Housing Hour to learn more about all things home and mortgage related, there you’ll find a wealth of information and helpful tips. 

Know Your Credit Score

Make sure you are on in control of your credit score and your monthly budget so you know what can spend. Lenders will use your credit history and potential to decide the terms of your mortgage. You can get a free credit assessment and any other advice by contacting a loan officer. 

Find Out How Much You Can Afford on a House

Calculate the maximum amount you can afford. Add up all your monthly debt so you can see how much of your income goes toward covering those costs. This is known as the back end ratio. Most lenders look for a back end ratio that is under 43%. Lenders will also want to see if you have a steady source of income and how much debt you have before determining the loan amount. If you want to speed up the process, think about getting pre-approved for a loan. This process is very involved, but it definitely speeds up the approval of your loan. Click Here for some great tools to assist you calculate costs. 

Understand the home buying process

Buying a home is one of the most important decisions you can make, so you’ll want to know what’s involved from start to finish. Your broker real estate agent can explain all the specific details about shopping for a home, but it’s good to have a basic idea of how it works. Here’s a basic example of the events involved in buying a home from start to finish. 

1. Get pre-qualified
2. Find a Home. Search through listings, find an agent, or through networking. Then make an offer on the home. This can involve some negotiation, and then you will make a deposit to go into escrow. This is called earnest money normally because you are promising to buy the house unless there are any serious complications. Once you have placed the earnest money the house is off the market for the most part.  Have the home inspected to make sure everything is on the up and up.  If there are any major problems, you may cancel your offer at this time or renegotiate.  
3. The Mortgage Process...You need a trusted company and advisor to walk you through this.  Many things will occur during this time. (Credit qualifying, appraisal etc...)
4. Close. Closing is the last step to owning a home. Get out a pen, because you’ll be signing a lot of papers, and that’s it.  

Build Up Your Savings

This goes without saying, but saving up your money can be very beneficial during the home-building process. You can make a larger down payment, fund improvement projects or repairs, or to pad your financial profile. To learn more about the world of mortgage lending and real estate stream or download The Housing Hour’s episode on The Liquidity Factor.