Tips For First-Time Home Buyers

The No. 1 tip that we can offer first-time home buyers is to be sure you’re ready. The average mortgage loan term is 15 – 30 years. Although you don’t need to stay in your home for that long, buying a house is still a major commitment. Be 100% sure that you’re ready for homeownership before taking on a mortgage.

Start by asking yourself these questions:

• Am I ready to commit to this home and city for at least 5 years?
• Do I have an emergency fund that can cover at least 3 months of expenses?
• Do I have a stable income?

If the answer to any of these questions is “no,” you may want to hold off on a home purchase for now. Keep saving. Keep researching. Consider whether you have any events on the horizon that could affect your location, income or expenses. If so, these are other reasons to pump the brakes.

It can be tempting to jump right into hunting for the perfect house, particularly if this is your first time – and especially if you’re in a rush to move out of your parents’ house.  However, it’s a really good idea to get a mortgage preapproval before you begin comparing properties.

Knowing how prequalification differs from preapproval is also important. Let’s review that difference now.

• Prequalification letter: A prequalification is an estimate of the amount of home loan you can get. It’s based on an informal evaluation of your income and other information.

• Preapproval letter: A mortgage preapproval is an official document from a lender that tells you exactly how much loan money you can get based on your financial information, such as W-2s, bank statements and your credit score.

Benefits Of Preapproval

Some of the benefits of getting preapproved include:

• You know exactly how much home you can afford. You and your real estate agent know your home-purchasing power once you have a preapproval letter in hand. This will help you shop within your budget.
• • You can make a stronger offer. Sellers need to know that the buyer they choose can afford their home. A preapproval shows a seller that you have the money needed to purchase the home.

   

  • You’ll experience fewer surprises. When you’re preapproved, you’re less likely to run into last-minute surprises or delays with your mortgage lender.

  The bottom line? Request a preapproval before you start shopping for a home. Read on to learn why a preapproval may not reflect the final loan offer.

  3. Maintain Your Credit

  Now is not the time to open a new line of credit, like a credit card or a personal loan. When you apply for mortgage preapproval, lenders will pull your credit report. They’ll do it again before you close on the house and its corresponding mortgage.

   

  If they find that you’ve taken out another loan or line of credit, that your credit balance has increased, or that you’ve started to make late payments, it could risk your final approval.

   

  Be sure to keep paying your bills on time. Don’t attempt to influence your credit rating for better or worse or begin any risky spending. Lenders want to see that your behavior patterns are consistent and reliable for future payments.

  4. Save For A Down Payment

  One of the most important priorities of the Federal Housing Administration (FHA) is helping home buyers with the purchase of their first home, and this includes assisting borrowers with their down payment. If you qualify as a first-time home buyer, you may have access to state programs, tax breaks and an FHA loan.

   

  According to the U.S. Department of Housing and Urban Development (HUD) website, a first-time home buyer is anyone who meets the following criteria:

  • An individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the This includes a spouse. If either meets the above test, they’re considered a first-time home buyer.

   

  • A single parent who has only owned a principal residence with a former spouse while married.

   

  • An individual who’s a displaced homemaker and has only owned a principal residence with a spouse.

   

  • An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.

   

  • An individual who has only owned a property that wasn’t in compliance with state, local or model building codes, and can’t be brought into compliance for less than the cost of constructing a permanent structure.

   

  If you qualify as a first-time home buyer, you can benefit from several assistance programs, including down payment assistance loans and grants.

   

  We’ll get into minimum requirements below, but the upside of saving at least 20% on a down payment is that you can avoid private mortgage insurance (PMI) on conventional loans.

  5. Understand Your Loan Options

  Did you know that you can decide between multiple types of mortgage loans? The type of loan you choose will determine your down payment amount, the type of home you can buy and more. Here are some of the more familiar types:

  • Conventional loans: Conventional loans are the most common type of home loans. You can purchase a home with as little as 3% down.

   

  • FHA loans: An FHA loan can allow you to buy a home with less strict financial and credit score requirements. You can get an FHA loan with a 3.5% down payment and a credit score as low as 580.

   

  • USDA loans: USDA loans are for people who want to buy a home in a qualified rural or suburban area. You can get a USDA loan with 0% down, subject to household income restrictions. Rocket Mortgage® doesn’t offer USDA loans at this time.

   

  • VA loans: VA loans are exclusively for veterans and members of the armed forces and National Guard, and qualified spouses. You can buy a home with 0% down if you qualify for a VA loan.

   

  Each type of loan has qualification standards that you must meet. For example, VA loans carry military service requirements. Make sure you meet these standards before applying.

  Once you have a goal in mind, you can begin to set up automatic payments to your savings account, making it easier to predict when you can make your move.

  Good Luck!!

  Call Saba Khan to connect you with a trusted Lender!!

  

   

  Why Work With Us?
  Saba Khan is a local Realtor with a team of trusted experts you need to close a transaction. At one stop  you’ll find our Trusted Lenders, Attorneys, Inspectors, Title Agents, Contractors that Saba Trusts with her own home.

  Email your questions to
  Saba.Khan@cbmoves.com
  or call us 347.781.5426. We are available after hours and weekends, too.

  Helping You Make The Next Move!

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