Category: Helpful Information
Being a first-time home buyer is a dream come true! But to make it come true, you'll have to work through the mortgage and home buying process. The good news is that there's a lot of useful information online that can help you create a strong plan for purchasing your first home. We've put together 7 essentials steps for first-time home buyers to follow as they navigate the home-buying process.
The moment you start thinking about purchasing a house, you should start thinking about improving your credit score. It's simple - the higher your credit score, the better interest rate and other terms for a home loan. You can get a free copy of your credit report at annualcreditreport.com once every 12 months. Remember that just 100 points difference in your credit score could cost you, or save you, thousands.
Once you are a homeowner, you're responsible for all the maintenance and upkeep costs that suddenly come your way. If you want to be financially prepared for all unexpected expenses, make sure you have paid off the debt you can and have an emergency fund saved for your first home. Try to create an emergency fund equivalent to the amount of three to six months of your expenses.
Figure out how much house you can afford! Ideally, your monthly housing cost (including fees, taxes, insurance, etc.) shouldn't be more than 25-40% of your monthly take-home pay. There are plenty of calculators online that can help you determine what you can afford.
Most conventional mortgages require a 20% down payment. However, there are many other options available if you do not have the full 20% down payment saved. If you can save enough money for the down payment, you won't have to pay for Private Mortgage Insurance (PMI), which usually costs 1% of the total loan value. In case you don't have the full amount, there are first-time home buyer programs that can help, including Private Mortgage Insurance (PMI) or government lending programs.
Before you start a home search, make sure to get a pre-approved for a mortgage from a trusted financial institution. This will show sellers that you're a serious buyer, which is especially important for first-time home buyers. To get pre-approved, you'll need to verify your financial information (proof of income, taxes, etc.) and submit your loan for preliminary underwriting.
Once you're pre-approved, you and your real estate agent can start browsing homes. Picking the right real estate agent is a crucial step as this person will make sure you target homes that meet your priorities in your price range. A right agent will also help you make a competitive offer within your budget and the home's value.
An average closing process takes around 43 days, which gives you plenty of time to triple-check that all your financial documents are in order and review all lending documents. A real estate agent will schedule the remaining steps from the home inspection to the final walkthrough, and they'll keep you informed about any roadblocks. Your mortgage lender will also keep you updated on the financing end to ensure all finances are in order for your purchase.
If you’re a first-time home buyer and are looking for a trusted mortgage lender, look no further! Contact Premier Source FCU to help guide you through the mortgage process.
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