For first time home buyers, the experience of finding and purchasing a home can be daunting. You have to research homes and residential areas, learn new terms and go through the mortgage process. In getting the right home for the right price, follow these tips.
Get prequalified
Knowing how much you can afford will keep your home shopping focused to homes you can afford and give you credibility with sellers.
Familiarize yourself with industry practices
You should know what an appraisal is, how your credit score affects your ability to get a good loan and what to look for on your Good Faith Estimate (GFE) just to name a few. Check out our mortgage glossary if there are any terms you are unfamiliar with.
Research, research, research!
The more you know about the process and the neighborhoods you are looking to purchase in, the more likely you are to get a deal that makes you happy down the road. You're not buying a new pair of jeans here. This is probably the most important purchase you'll ever make. This site has numerous articles for you to learn more about mortgages and you'd be wise to read them.
Understand how much you can afford
We have 18 calculators on our site that analyze your financial situation. While not all of them are intended for a first time home buyer home loan, there are many that can give you an overview of your situation and what you can afford. Remember that these are just a guide, though. The actual payments on your first time home buyer mortgage will be determined when you apply for a loan.
Ask yourself the tough questions
A first time home buyer is going to be somewhat unprepared for the total cost of owning a home and would be wise to ask tough questions before completing a loan.
- Is your job and income reliable?
- What kind of contingency fund do you have for emergencies?
- Can you afford a down payment? What about closing costs?
- What's your long term plan? Will you be moving soon?
- Are you ready for the added responsibility of owning a home?
Check out government programs for first time home buyers
There are a multitude of programs that can make that first home purchase a bit easier and more affordable. For example, California residents may qualify for a program called CalHFA that often features below-market rates (check with your local government to find similiar programs). Teachers are an example of a group of people that are given beneficial rates as well.
Check out the FHA website for national government first time home buyer program info.
The important thing to remember in securing a first time home buyer mortgage is that the process takes a lot of work and dilligence. If you put in the time, you will most likely end up satisfied.
