If you’re considering buying your first home, it can be hard to know where to start, especially with your mortgage application. With all the numbers, terminology, and paperwork involved — not to mention a new set of responsibilities to take on — it can be a little daunting. Here are some first-time homebuyer tips that will help guide you through the whole process.
Decide What Your Needs Are
Though you may have always wanted a two-story house with a grand staircase and a large yard, your needs may have changed since you began planning to buy a home. Before you start looking for your new dream home, take some time to think about what you really need. Then, make a list of those requirements so that you can choose the most important things to look for when you see houses or apartments. Remember that the more expensive the house, the more you’ll have to borrow.
Know the Real Cost of Your New Home
To get a true sense of how much your new home will cost, take into account all the housing-related expenses that most people overlook—such as homeowners or renters insurance and private mortgage insurance (PMI). In addition to your mortgage payments, you should consider costs for lawn and yard maintenance, appliances, repairs, and homeowner’s association fees. It is also important to add in utility bills like gas, electricity, and water.
Start Saving
Don’t wait to start saving for a house — get started now. Start by making an automatic transfer to your savings account with each paycheck; you can also put aside bonuses you earn at work and tax refunds. Then, look for areas where you can cut costs in your current spending. For example, pack a lunch to bring to work instead of buying food at a restaurant every day. This way, you’ll have enough saved up for the down payment.
Build Credit Smartly
When you’re buying a home, your credit score is an important factor in determining whether or not you’ll be approved for a loan. If your credit score isn’t high enough, you might have to pay a high-interest rate.
Look up Mortgage Loan Options
You can choose between different mortgage loan options. These include FHA loans and VA loans. Fixed-Rate (FR) Loans have the lowest monthly payments, but they also come with the highest initial interest rates. On the other hand, Adjustable-Rate (AR) Loans usually come with lower interest rates, but the payments can fluctuate from one month to the next. When deciding which home lending option is best for you, talk to an advisor at your bank or credit union.
