First-Time Home Buyers
Thinking of buying your first home? This is a very exciting, yet daunting time. Purchasing a home is the biggest investment most people make in their lifetime and it should not be taken lightly.
A report from the National Association of Realtors (NAR) states “the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.’ That means an average homeowner’s net worth if roughly 40 TIMES that of a renter. Being a homeowner is extremely important to achieving financial success.” It’s the “American dream.”
The steps to buying a house might seem complicated—particularly if you’re first time homebuyer with no prior experience. Between down payments, credit scores, mortgage rates (fixed or adjustable), buy downs, inspections, contingencies, title and escrow, property taxes, interest rates, closing dates, earnest money closing costs-- it can all be so overwhelming. Educating yourself on the process and requirements of buying a home is an important first step, and I’m glad to help you start!
Starting with a lender and a real estate agent who work specifically with first time homebuyer’s and are willing to invest the time to educate you in the process is extremely important to make your first purchase (and following move up homes) as stress-free and successful as possible. Here are a few first important steps:
*Build your good credit. Missed payments, overextended credit, and high debt-to-income ratios can lead to bad credit, which could keep you from being able to buy a home. But did you know a lack of credit (limited or no credit) is quite often a problem with first time homebuyers?
*Check your FICO credit score. This is a scale of 0 to 850. Generally a score over 720 is good. You can get loans with scores in the 600’s but they’ll likely be at higher rates. You can check your credit score for free through most of your banking accounts or credit cards. Discover.com will provide your FICO score for free whether you have an account with them or not. Avoid sites that charge for this information.
*Save money for your down payment. But you don’t need 20% down as many people think. There are many loans with 3.5%, 5% and 10% down. There are even a few with 0% down. You may qualify for a DPA (down payment assistance) or one of many first time homebuyer programs. You’d be surprised some allow incomes up to 80% of the county’s median income. See the link below to some of these programs.
*Don’t cut yourself too short. Remember, you’ll need extra money for moving costs, utility hookups, maintenance, and so on. So leave yourself a cushion.
*Get pre-approved with a lender. Give me a call. I can put you in touch with a few great lenders who can get you pre-approved for a loan. In today’s market, your offer on any home needs to be accompanied with a pre-approval letter from a reputable lender familiar with any first time home programs.
*Choose a Realtor to work with. A Realtor® is a member of the National Association of Realtors® (not all agents are) and adheres to a code of ethics. Most first-timers need a great real estate agent—specifically a buyer’s agent, who will guide them through the process of finding the right houses, negotiate a great real estate deal, and explain all of the nuances of home buying along the way. The best part? The agent’s services are typically free to first-time home buyers (because the seller generally pays the sales commission).
*Give me a call or email today. I’d love to connect with you and spend some time educating you on the process of achieving home ownership and connecting you with your first home.
