As a first-time homebuyer, maybe you are looking for advice, or maybe you have received more advice than you know what to do with. The process can be a bit overwhelming, but the more you can learn from experts and from the experiences of others, the smoother your home buying process will go.
We’ll cover just a few key points to get you started and let you know what to expect:
Start Saving Now
The first thing you have to do if you are serious about buying a home is save money for a down payment. Even with the low-down payment options available to homebuyers, you’ll need to have at least 5-10 percent of the price of the home saved to cover closing costs.
Saving isn’t always easy, but if you create a plan early on and stick to it, it you will have a down payment before you know it. TheSimpleDollar.com lays out a few simple steps you can follow to save your down payment.
It may seem obvious to some, but step number one should be to open a savings account that is connected to your checking account, if you don’t already have one. From there, calculate your monthly income and expenses to determine how much you have leftover at the end of the month to work with. Decide how much of that to transfer to your savings and, voila! You have a savings plan.
Tip: When you come into an unexpected lump sum of cash—a bonus at work, your tax refund, an inheritance etc., try not to splurge it all. The extra boost to your savings can be a motivator to stick to your plan.
If you’re in the market for your first home, you probably know that a pre-approval is not the same as pre-qualification for a mortgage. You may feel like a pre-approval isn’t as meaningful or doesn’t carry as much weight as a pre-qualification, and as far as the bank is concerned, you are correct.
But, what happens when you find your dream home, and you are up against a competing offer? If one prospective homebuyer has a pre-approval letter and the other doesn’t, the one with the pre-approval is going to look more serious to the seller.
Tip: Getting pre-approved is free, and it’s a great way to get all your paperwork in order before you officially need it for mortgage qualification.
‘Don’t Take It Personally’
Finally, Libby Kane of Business Insider shares her own personal experience as a first-time homebuyer. Her most important takeaway is to remember that, while this may be the biggest investment of your lifetime so far, to the real estate and mortgage professionals you encounter on your way, it’s just another day in the life.
Kane recalls that it can be a bit demoralizing, knowing these strangers are closely scrutinizing your financial records. After all, the oneness is on your to prove you are reliable enough to take on this large debt. You may be an upright, conscientious citizen, but they’ve seen it all. As a first-time buyer, you have no actual record that proves you are capable of paying a mortgage, so they’re taking a chance on you.
Tip: Be prepared to file paperwork that proves all aspects of your personal financial situation.
Many low-down payment options are available to first-time homebuyers. Check out rates on California FHA mortgages or call 888-502-2136 to talk to a mortgage lending expert.