5 Goals To Consider When Buying Your First Home
You will likely look back at your decision to buy your first home as one of the best you ever made. Knowing your monthly payments go toward building your home equity instead of rent is comforting. Even so, the road to homeownership is not always an easy one, especially for people who have never owned a home before. So, here are some home loan tips for first time buyers and people from marginalized backgrounds.
1. Good Credit
Even a credit score in the 500s can secure you a home loan. However, the mortgage interest will be much higher and your options for mortgages will be slimmer. Take the time to build your credit history. This might take anywhere from six months to a few years, but doing so will save you thousands of interest on your first mortgage. Here are some tips recommended by finance gurus:
- Ask a family member with good credit to add you to their oldest account in good standing.
- Review your credit report and dispute any discrepancies.
- Address any delinquencies on your account by bringing the accounts into good standing.
- If you have never had an installment loan before, consider a credit-builder loan.
- Pay down credit card balances.
2. Adequate Savings
Some mortgage programs require zero down payment for the mortgage. Two common options include the VA loan for military personnel and the USDA loan for homes in rural areas. FHA and conventional loans both require down payments. This is 3.5% and 3% of the mortgage total, respectively. Buyers also need to pay for closing costs and other fees incidental to the home-buying process.
3. Early Pre-approval
Once you have your finances under control, it’s time to seek pre-approval. This is the moment of truth when you finally discover how much the lender is willing to provide. Getting pre-approved also gives other professionals who work with you some peace of mind that your search will move on to the next step. After receiving your pre-approval, you can also set a realistic budget of what you can afford. Remember that, ideally, you purchase a home far below what you qualify for.
4. Professional Expertise
In today’s world of e-commerce, even properties can be bought online. You might feel tempted to base your entire search on Zillow and then contact an agent to seal the deal. In fact, many millennials and gen Z buyers find homes in this way. However, your real estate agent likely knows about properties not yet listed. In highly competitive markets, this could give you the advantage of getting your offer in before the chaos begins.
5. Decisiveness
Chances are that several homes will strike your fancy. This is natural, but being decisive is important. The longer you take to make up your mind, the higher the likelihood of someone beating you to the front of the line. Even so, don’t rush into something that feels wrong for you. Talk to your agent and make as informed a decision as possible.
Finding the right lender is a bonus addition to our home loan tips for first time buyers. We are a trustworthy lender that does everything possible to ensure you get the best deal and choose the right program for your needs. Contact us for more information.
Sources:
- https://www.nerdwallet.com/article/mortgages/whats-exact-credit-score-need-buy-home