First-time home buyers have a learning curve; however, we love working with first-time home buyers and will gladly answer questions and help guide you through the process.
When it is your first time buying a home, it can raise a lot of questions, and there are several things you should know in advance so the process can go more smoothly. Think about the following steps as you go through your home purchasing adventure, and you’ll be more prepared.
Twelve months in advance:
1. Speak with a Mortgage Broker. When you are ready to consider a home, develop a relationship with a mortgage broker and Realtor®. When you have a solid team behind you, they will guide you and help you avoid common mistakes.
2. Start saving for your down payment. Devote this year to saving money and paying down debt. You’ll need at least 3.5% down for an FHA loan, or 5% to 20% for a conventional mortgage. If you are buying in an area that qualifies for a USDA loan, then this can be an excellent option where you can borrow up to 100% of the value of the home. Lenders also like to see job and industry stability. Your mortgage broker can help you understand your debt-to-income ratio, and why this is so important. The rules change frequently, so creating a relationship with a mortgage broker is critical.
3. Learn what you like. When a home catches your eye (a listing or a photo) pin it to a board on Pinterest.
Six months in advance:
4. Learn how to improve your credit score. To boost your credit score, check your free credit report on credit karma. If there are any mistakes on your credit report, you can get your creditor or the credit bureaus to correct the errors. Pay bills on time, chip away at credit card balances, avoid new debt, and don’t close any accounts or apply for new credit without speaking with your mortgage broker. You could go to www.optoutprescreen.com and opt out of receiving credit card solicitations for 5 years.
5. Figure out what you can buy. Use an online calculator like the one on our website to estimate your mortgage payments. You will want to know how much principal, interest, taxes, insurance, HOA dues, and average utilities. Your Realtor® and mortgage broker can help you with determining most of these expenses. It is important to think about your entire budget in order to make a wise home buying decision.
6. Forecast future bills. With an idea of how much home you can afford, you can create a manageable and detailed budget. We suggest you add approximately 1% of the home’s value for yearly maintenance.
Three months in advance:
7. Pick your loan. We suggest you meet face to face with your mortgage broker to determine the best type of loan for your situation. There are many loan types from which you can choose and some will better fit your budget than others.
8. Prove you’re a serious shopper. Based on your income and credit, your mortgage broker will give you a mortgage pre-approval. We suggest that our clients go through underwriting upfront in order to avoid any surprises.
Here at Alaris, knowledge is key. We’re here to help you through the entire process and have a vast amount of knowledge and experience in the real estate market.