We know buying your first home can be extremely overwhelming, for most people, it will be their biggest investment in their lifetime! For the most part during a financial transaction people mostly use their head for the purchase and their heart gets them to the store. In our industry surprisingly enough most people mostly use their heart instead of their heads! With all this being said we thought it might be helpful to compile our top 5 tips for first time home buyers.
- Get a Pre-Approval Letter
Most people think to get pre-approved they need to have an exact house picked out. That is not the case, a pre-approval letter is where we look into your finances and state in writing how much a bank is willing to lend you. Most Realtors will tell you the buyer that has a pre-approval letter in hand against a buyer without is a substantial difference.
- Understand & Prepare for Mortgage Loan Closing costs
Closing costs are funds, IN ADDITION to a down payment paid at the closing table. According to Nerdwallet.com; “Mortgage closing costs typically run from 2% to 5% of the loan cost, including property taxes, mortgage insurance, & title search fees.” With that being said you will definitely need to budget for the money you will need to close a mortgage. A great tip in avoid massive closing costs is to ask the seller of the house you would like to buy to pay for a portion of closing costs.
- Know Your Down Payment Options
In the mortgage world there are tons of different loan products & programs. The key is to have a great loan officer who is looking out for your best interest or taking the time to study-up on all the mortgage products & programs available to you in the industry. Believe it or not for first-time home buyers there are a good amount of options for decreasing your down payment. For example, the Federal Housing Administration (FHA) offers a mortgage loan product that requires only 3.5% down payment.
- Check Your Credit
At the time when you will need a mortgage loan to get that house of your dreams you will want to be confident in your finances & your credit score. Your credit score is one of the key factors in whether you can get approved or not for a mortgage as well as your credit score will help determine your interest rate.
- Hire a buyer agent (Realtor)
Having a buyers agent especially as a first-time home buyer is critical! Did you know that a seller of a home is responsible for paying both the listing and buyers agent commission. So as a first-time home buyer it is a no-brainer because essentially ITS FREE. The right agent should be knowledgeable about that area you want to buy, extremely skilled in negotiation, & resourceful.
We hope that this 5 tips will help throughout the home buying experience!