Buying a home for the first time can be overwhelming. As a first-time homebuyer, there are so many decisions to make along the way, from your buyer’s agent to your loan officer, to your loan program. But buying a home doesn’t have to be stressful! Making sure you are prepared will put you miles ahead of other buyers, and help ease your mind during the entire process. Following some simple do’s and don’ts is a great place to start if you are thinking about buying a home for the very first time.
First-Time Home Buyers Do’s:
DO research your lenders
Your lender is likely going to be with you throughout the entire home buying process, usually before you’ve even started looking at homes! As a first-time homebuyer, you want to find one that you feel comfortable with. Don’t be afraid to get different quotes from multiple different lenders, and decide which one is the best for you.
DO ask questions about all of the loan programs offered
When you’ve chosen your lender, make sure you ask about the pros and cons of each loan program for your situation because Understanding the Mortgage Process as a First Time Home Buyer is very important. Your loan officer will likely present several program options they consider a good fit for you. Some may be specifically designed for first-time homebuyers. If you don’t fully understand something, they will be more than happy to clarify and help you make the right decision.
DO find the perfect home for you
Your buyer’s agent can help you find the perfect home. Don’t settle for something you aren’t sure you want-a home is probably the biggest purchase you will ever make! You deserve to get exactly what you want, and your agent is there to help you find it.
DO make sure your credit is in good standing
There are loan programs offered to fit most credit scores, but the higher your score, the better deal you are going to get as a first-time home buyer. Make sure your credit is in good standing before you start the mortgage loan process by making all of your payments on time, keeping your utilization low by not adding to the balances on lines of credit, and not closing or opening any accounts until after the loan process is over.
DO ask about down payment assistance programs
What every first-time homebuyer should know about down payment assistance options. These programs gift you money to use toward your down payment. Check with your loan officer about the stipulations and requirements for each program to see if one fits your needs.
DO find the right buyer’s agent
Finding the right buyer’s agent is a key component of the home buying process, especially for first-time home buyers. They will be able to help you draw up the contract when you are ready to make an offer and help you with getting the best deal on the home. Then they are able to act as a go-between during your entire inspection and loan process and can explain anything that doesn’t make sense. Interview a few different agents to see which one you think is a good fit for you.
DO determine how much you can afford
Your lender can help you with this, and let you know the amount you are pre-qualified for. This way, you are only looking at homes in your price range. First-time home buyers might not know exactly what they want or can afford, and your lender and buyer’s agent can help you with both of these things!
DO get adequate homeowner’s insurance
Your lender will require homeowner’s insurance. If you’re unsure where to start, ask your buyer’s agent or loan officer for recommendations. They can connect you with insurance agents that they work with often, and make sure you are getting a good deal on your policy. Sometimes you will save money if you decide to bundle your home and auto policies, so look into the options for that as well with whatever company you decide to go with, so as a first-time home buyer you should always ask many questions.
DO ask questions to make sure you fully understand the home inspection and loan process
If there is anything throughout the home buying process that you don’t fully understand, don’t be afraid to ask questions! Your buyer’s agent and loan officer can help explain anything that you need them to. For first-time home buyers, they are more than used to it, and after all, that’s part of their job!
First-Time Home Buyers Don’ts:
DON’T only shop for a rate, without looking at the APR
The interest rate on a loan is the cost of borrowing the principal loan amount. This is always expressed as a percentage. The APR is the Annual Percentage Rate, and this is used to measure the cost of the mortgage. It includes the interest rate and other costs, such as broker fees, discount points, and some closing costs, and is also expressed as a percentage. The APR is likely going to be higher than your interest rate. You will want to take both into consideration to make sure you are getting the best deal.
DON’T empty your entire savings
Buying a new house can come with a lot of unexpected expenses. You will want to make sure that your savings account isn’t drained after closing on your loan, and that you’ve left a cushion for a rainy day. As a first-time home buyer, you might not be sure what to expect after closing on a home, so it’s best to leave yourself with some money in the bank just in case.
DON’T shop for a house before you are pre-approved
You want to make sure that you can afford the homes you are shopping for, and for that reason, many agents will require a pre-approval letter before they start to show you homes. It’s a good idea as a first-time home buyer to get this out of the way early on and will make your first time home buyer loan process easier once you are officially under contract.
DON’T buy new things for your home right before closing
When being a first-time home buyer it is exciting and fun while it can be tempting to go out and splurge on new furniture for your new house, you will want to wait until after your loan closes to do so. Adding significant balances to existing lines of credit, or opening new accounts, can delay your loan process significantly, or even cause you to become ineligible for the loan.
Being a first-time home buyer can feel a little daunting. You are starting the process for something that you’ve never done before, and it’s a big deal! Finding a good buyer’s agent and loan officer to help guide you through the process and answer your questions can be the difference between a stressful and a smooth home buying experience. Following the essential tips above will help set you up for success, and put you ahead of the game. And remember, at the end of the day, the goal is to get into the home of your dreams! Ready to make your dream home a reality? Contact us today and let’s get started on this exciting journey together!
FAQs: First-Time Home Buyers: Do’s and Don’ts
Researching lenders and loan programs is crucial because your lender will be with you throughout the home buying process. As a first-time homebuyer, it’s essential to find a lender you are comfortable with. Obtain quotes from multiple lenders to compare and choose the best fit for you. Also, ask your loan officer about the pros and cons of various loan programs to ensure you select the one that best suits your financial situation and homeownership goals.
Getting pre-approved before shopping for a house is important because it ensures you know how much you can afford. Many agents require a pre-approval letter before showing homes, as it confirms your ability to purchase. Pre-approval streamlines the buying process, helping you make a strong offer and move forward quickly when you find the right home.
First-time homebuyers should explore down payment assistance programs, which provide funds to help with the down payment. These programs often have specific requirements, such as staying in the home for a minimum number of years. Ask your loan officer about the stipulations and see if any programs match your needs. Down payment assistance can make purchasing a home more feasible by reducing the initial financial burden.
