Expert Tips for First-Time Home Buyers

Whether you’re a first-time home buyer or not, there is always new information to learn about purchasing a home. However, if you’re a first-time home buyer, you might feel like you’re entering uncharted territory. Researching and becoming informed about your options can help you make smart choices as you prepare for this new adventure. We’ve compiled a list of tips to ensure you know what to expect.

Decide on Your Maximum Monthly Payment

Fixing your monthly budget is the first step towards home ownership.

There is no set formula for creating a housing budget each month. Select a method and payment schedule that works for you. Some first-time buyers base their decision on their current rent. Other to-be homeowners use mortgage calculators. Throughout your whole property hunt, use that number as a benchmark.

Making wise judgments is easier when you’re aware of your spending limit.

Improve Your Credit Score

Your credit score influences your final mortgage conditions and down payment options. Credit scores for buyers are time-based. If you start planning on time, you can raise your credit score and get a lower mortgage rate.

Get a Pre-Approval

Getting a pre-approval will make your bid stand out from competing offers for a home.

Pre-approvals are determined based on your income, savings, and credit score. A pre-approved mortgage establishes your credibility with buyers, sellers, lenders, and yourself. It points out potential problem areas in your application and offers suggestions for getting a lower mortgage rate. Many mortgage lenders offer pre-approvals to first-time buyers at no cost.

Get Multiple Quotes

According to a 2018 Freddie Mac survey, buyers who check mortgage rates from two or more lenders save $2,000 on average. Individuals can save money by getting a mortgage at a lower rate, paying less at closing, or doing both.

Sometimes a lender will boost its rates to discourage new business in a state where it has offered too many loans. Sometimes, different loan officers have different commission rates, further affecting your mortgage rates.

Don’t Spend Everything on Buying a Home

Here are some home-buying rules to keep in mind:

– Only a comfortable fraction of your monthly income should go towards home expenses.

– Reduce your down payment to ensure you have enough funds in your account after closing.

– Get life insurance that will cover the rest of your mortgage.