It's an exciting experience to buy your first home. It can also be overwhelming.
If you haven't been through the process of buying a home before, you'll likely be surprised by the sheer volume of paperwork, effort, and due diligence required for the transaction to close.
Searching for and finding the right home is just the first step. If you haven't already, download our Buying Guide for a glimpse at some of the key steps along the way.
If you've decided to buy your first home, please give me a call. I truly enjoy working with new buyers during this exciting time. Even if you're not ready to make a decision yet, I would still love to talk with you about your plans, and can provide valuable insight and information while you evaluate your options.
When preparing to buy your first home, there are a couple of steps you can - even before you begin your search - take to make the process go smoothly.
We often discuss strategies for how to negotiate the very best price from the seller. And there is no doubt this is important. But what if I told you there is an even better way to save thousands - or even 10s of thousands - off the price of your home?
How? By establishing a good credit history. Consider for example buying a $150,000 home with a 10% down payment and a 30 year mortgage.
In this scenario, a buyer with a credit score which qualifies them for a 4.5% interest rate instead of a 5.0% rate will save over $15,000 over the life of the loan.
Talk about a easy way to get a nice 10% discount!
This is why it is important to establish good credit during the months and years leading up to buying your first home. If you haven't before, an important first step is to pull your credit reports and check them for accuracy. You can pull each of your reports (there are three) from annualcreditreport.com once per year for free. If you do find any errors, you can file a dispute to correct the information.
Once you're confident your information is correct, if you're considering buying a home you should talk with a mortgage lender about getting pre-qualified. The lender will be able to tell you precisely how much money you would be able to borrow, and will present you with a pre-qualification letter. Getting pre-qualified doesn't obligate you to anything, and you can (and should!) still shop around for the best mortgage terms later. But this letter provides good information to have as you begin your home search. Besides = many sellers ask for a copy of this letter to be provided along with any offers to purchase.
The second benefit to getting pre-qualified is you will come away with firm knowledge of how lenders view your credit. If you're not happy with the rate you're offered, most loan officers will be able to offer tips on ways to improve your score to (hopefully) qualify for a better rate.
Another step to take in preparation of buying your first home is to begin saving cash. Stash away what you can off the top of each paycheck.
While there are many options on the market that allow buyers - especially first time buyers - to buy a house for little or no money down, you're still better off if you can afford at least some down payment.
You will save money over the term of your mortgage by financing less of purchase price.