How to Buy Your First Home
Buying your first home can be very exciting and, for some people, overwhelming. If you’re planning to take the plunge into home ownership for the first time– congratulations! Before you start the process of actually looking at homes, let’s look at some key information you’ll need to know.
Get Your Finances in Order
Know your credit score and take steps to improve it if necessary. Determine how much you can comfortably afford to spend on a house and stick to your budget. Lenders use a debt-to-income ratio that includes your mortgage, property taxes, and homeowner insurance, representing roughly a third of your monthly gross income.
With this information at hand, you can decide how much of a down payment you can afford to make. Requirements vary, but about 10 to 20 percent of the home’s price is generally needed as a down payment to qualify for the best mortgage rates.
Get Pre-Approved
While you’re calculating your down payment, it makes sense to focus on another of the best tips for first-time home buyers: finding out how much home you can afford.
Knowing how much home you can afford makes it easier to search. Though you can take this step on your own, it often helps to work with a professional. Your lender will go through your finances, savings, credit, and debt-to-income ratio. Based on that, they’ll provide a pre-approval letter to show your broker and any listing broker proof of what you can afford. This letter can be critical when sellers are considering your offer. In some instances, your lender will recommend holding off on buying a home until you get your credit score up. A better score can mean a more favorable rate. Make sure you follow your lender’s advice, as it can often save you thousands of dollars over the lifetime of your loan.
Ask About Different Mortgage Programs
Don’t throw money out the window! An important question to ask your mortgage lender before buying your first home is whether or not you qualify for any first-time buyer programs or grants. Depending on where you’re looking to buy your first home, there might be some great programs available for you. If you’re wondering what local programs might be available in your area for first-time buyers, it’s highly recommended you consult with an experienced mortgage professional. This will ensure you’re not missing out on any assistance that could help you financially.
Consider Home Types
Most buyers have a good idea of what they’d like to purchase. However, one of the best tips for first-time home buyers is to consider all the options for your first home type. For one, location is key. Narrow your search to particular areas and neighborhoods that appeal to you. Consider housing prices, school districts, work commuting times, and proximity to activities that you enjoy. Spend some time in the areas you are considering by shopping, dining, or visiting nearby attractions to see if you feel comfortable and “at home” there.
Find the Right Real Estate Agent
The right real estate professional can help you with your home search and can offer invaluable information and guidance along the way. If you don’t know a real estate professional, ask friends and family for referrals. Meet with potential agents in person and tell them your budget and goals. Ask them what level of service you can expect to receive from them, and how often they plan to communicate with you. Find out if they like working with first-time buyers, and if they are willing to spend the extra time that you may require. Make sure the agent you choose has experience in the geographic areas that interest you.
Understand the Process
Inspection phase, money deposits, attorney approvals, bank appraisals, mortgage commitments. There are a lot of components that go into buying a home, and these are some of the steps that you’ll encounter throughout the process. It’s extremely important that you understand the process of buying a home before getting involved. If you don’t have any idea about the process of buying your first home, discussing with an experienced professional is a great way to educate yourself on the process.
If you feel overwhelmed and you need help, please contact us.
American Star Mortgage has helped many first-time homebuyers across Southern California find the perfect home loan. With years of mortgage experience, our team prides itself on assisting our clients in understanding all the elements of the home buying process. Contact us at (844) 880-6296 or email us at [email protected].