Buying your first home is an exciting time for people throughout our country. It’s the epitome of financial success and the ultimate reward for hardwork. As Fort Wayne, Indiana’s own real estate agency, Greg Brown’s team at Indiana Home Experts are here to help you learn everything you need to know to make buying your first home a smooth and enjoyable experience. In a previous article, we defined what mortgage insurance is and why you need it, which is critical for first time home buyers to understand.
Tips For First Time Home Buyers
If you’re in the early stages of finding your first home, here are a few other helpful tips to help you make the most of your home buying journey:
- Find a reputable Realtor
Hire a professional and reputable real estate agent that is involved in the community, like the Greg Brown and his team at Indiana Home Experts. Even if you are looking to build a new construction home, our knowledgeable Realtors in Fort Wayne will work with you and for you throughout the entire home buying process.
- Save for a down payment
If you haven’t already started saving cash for a down payment, now would be the time to start. Depending on who your lender is and what their requirements are, as well as your current financial situation, how much you need to save for a down payment will vary. Generally, 20% of what the home’s for-sale price is, is common for a down payment. For first time homebuyers, there are many lenders that will allow you to put down as little as 3% for a down payment for the sake of the borrower, and make up the difference in added fees and private mortgage insurance.
- Determine your overall budget
Before you begin searching for your first home, you need to know what you can afford. Many first time home buyers will begin their search and find beautiful homes before they are even aware of what their budget looks like. It is fairly disappointing to see home buyers discover what their budget is, and come to the realization that they need to eliminate the majority of their “wish list”. If you are unsure what you can afford, search the Internet for mortgage calculators. They are not always 100% accurate, but they do provide you with an idea of what a monthly payment might cost you.
- Become familiar with your credit score
Your credit plays a huge role in your loan approval. It’s a significant factor to determine your financial stability and whether you are a reliable borrower in order to qualify for a home loan. Additionally, your credit score determines your interest rate and (possibly) the loan terms. Be sure you check your credit score prior to applying for a loan. It’s a good opportunity to review your credit history for any errors so you have the chance to dispute them, or correct any items that could be dragging you down.
- Refrain from any other large purchases
If you’re looking to purchase a vehicle, or finance new furniture, or anything that will require another loan, try to avoid doing so until after you’ve been approved for a mortgage. Any time you apply to open a new line of credit, the lender has to run a credit check and background search, which temporarily “dings” your credit and affects your credit score. If the home lender you’re applying to runs a credit check, and they discover multiple loan and credit card applications within a short time, this could jeopardize your mortgage loan approval.
- Research loan and down payment options
If you haven’t already noticed by now, there are a lot of loan options out there today. This isn’t necessarily a bad thing, it can just be overwhelming, especially for first time home buyers. First time home buyer programs are plentiful, and include federal mortgage programs that also allow loans with 3% down. Will it be time consuming and confusing? Probably—but it will be completely worth it in the long run.
- Consider the type of property to buy
You’ll likely already have a predetermined idea of what you’d like your first purchase to be—whether it’s a single-family home, townhome, or condo. But once you learn what your home budget is, this will also open your eyes to what type of property you’ll be able to buy. Think about what you’re willing to sacrifice for your price. Remember, your first home doesn’t have to be your forever home.
- Get pre-approved
If you have gone through this checklist, and you have done your research, made final decisions, and you’re ready to move forward with buying your first home—all you have left to do is get pre-approved! By getting pre-approved, the lender will examine your finances and credit history, and provide a written confirmation of what they’re willing to lend. Simply having a pre-approval letter in hand drastically improves your chances of getting the house you want, and it makes your offer more appealing to the sellers.
- Save for costs after move-in
If the home you are buying doesn’t come with all of your desired amenities, or it is going to need a little bit of work, you’ll probably want to have some extra cash on hand to buffer everything you’ll be paying for once you have your keys.
If you’ve gone through and completed these tips and you’re ready to take the first steps toward buying your first home, contact the Realtors at Indiana Home Experts. Our exceptional services and industry knowledge in the Fort Wayne area are unbeatable. Contact us today!