Too often many first-time homebuyers go into the process of making a purchase blindly, without a clue what they got themselves into. As a result, this can lead to a stressful and overwhelming experience when searching for the home of your dreams. To avoid making these same mistakes and ensure your first time purchasing a home is successful, it will be imperative to be prepared by knowing what’s ahead once you take the first step towards becoming a homeowner.
By checking your credit score, tackling any past debt, planning ahead, knowing what you want to buy, creating a budget, exploring what loans you are eligible for, and taking time to understand the process of getting a mortgage, it will be much easier for you to purchase a home.
While it may seem stressful at times, it will all be worth it once you find a home that’s just the right fit for you, your family, and your financial situation. To find the house of your dreams and turn it into a home, utilize these tips to make sure your first home purchase is a success.
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Check Your Credit Score
When purchasing a home, your credit score will play a very important role in the outcome of your mortgage payment. The better your credit score is, the better your interest rate will be on your mortgage, making everything a lot easier financially.
By checking your credit score before starting your home search, you can prepare to make a successful purchase by improving your score ahead of time.
Assess Your Debt
If you want to make sure your first home purchase is successful, it will be essential to get your debt under control. Whether your debts include credit card charges, student loans, or installment loans, getting them paid off will simplify the entire process of buying a home.
By working towards paying off your debts, you can prepare for what’s ahead while taking some stress off of your financial situation in the long run.
Create a Reasonable Budget
To be prepared to shop for a home, you will first need to create a reasonable budget. This budget should include the costs for not only your mortgage payment, but also your property taxes, bills, everyday expenses, and what you are actively putting into savings.
Oftentimes, lenders will want to be able to see two months of reserves in your bank, to ensure you will be able to make mortgage payments on time. While these requirements may vary from lender to lender, it can never hurt to have some extra money put up – especially when it is your first time buying.
Once you have a good credit score and have tackled paying off some of your debt, it may be in your best interest to get preapproved for your mortgage. This will not only help you find out how much you’ll be able to borrow but this will help guide your home search while preventing you from shopping outside of your limits.
If you can get preapproved, you will be viewed as a serious buyer. With this leg up you will be able to find a real estate professional that will be happy to work with you and help you find your way throughout the homebuying journey.
Decide What Kind of Home You’re Looking For
Once you are confident in your buying power, you can then decide what kind of housing options make the most sense for you and your family. By considering the amount of space you need to live comfortably and what you can afford, you will be able to choose if a single-family home, duplex, condominium, or townhome will be your best option.
Research All of Your Mortgage Options
To make sure your first home purchase is seamless and successful, it will be important to research all of the mortgage options that are available to ensure you are making the best financial decision for your future.
Remember, as you compare different lenders it will be important to focus not only on the interest rate but the additional fees that come with closing costs and paying the lender too.
Utilize Little to No Down Payment Options
While purchasing your first home can become a stressful process, don’t forget that there are little to no down payment. options to help you finance the home of your dreams. With both government and non-government home programs that require only 3.5% or less to purchase a home, it has never been easier to make your first home purchase a success.
One option is using an FHA loan, backed by the Federal Housing Administration, which can help first-time homebuyers who qualify with a minimum credit score of 580. This is a very popular route that many first-timers utilize, making it easier for those with an average credit score.
Another option for no downpayment is to utilize a VA loan, but you are only eligible if you are active duty, a reservist, national guard, or if you are a surviving spouse. Through this program first-time buyers can get a home with no down payment required, making it easier to settle into your home with ease.
If none of these options seem like the right fit for you, consider looking into Fannie Mae’s loan options. With downpayments as low as 3% and the only requirement being that one borrower is a first-time homebuyer, this is a great choice to help you finance your home purchase with success.
Buying the Home of Your Dreams
To make sure you are not going into the home buying process blindly and make your first home purchase a success, follow these tips to help you prepare and stay one step ahead. Even if you have no clue where to begin, by taking these steps you can work towards making sure you find your dream home, without breaking the bank.
By analyzing your credit score, handling current debt, getting preapproved, creating a budget, and knowing what type of home you’re looking for while checking out all of your mortgage options along with little to no down payments alternatives, financing you’re home will be easier than ever.