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7 Tips for First Time Homebuyers

Updated: Mar 17, 2023

If you're thinking of buying a home, congratulations! However, before you start browsing listings, you need to make sure you're financially ready. One of the first steps you should take is to find a mortgage lender and obtain a home loan.


Here are seven tips for first-time homebuyers to help you along the way.



Get Pre-Approved:

Mortgage lender pre-approval is an essential part of your homebuying journey. It will help you determine how much home you can afford, the payment you're comfortable with, and what price range you should look at. A pre-approval letter can also make your offer stand out in a competitive market.


When you're obtaining pre-approval, you'll fill out an actual mortgage loan application. The lender will verify the information you provide and check your credit. If approved, you'll get a conditional commitment in writing for a specific loan amount. You'll know the exact loan amount you qualify for, what your monthly payment will look like, and how much taxes and insurance will be.


Compare Mortgage Options:

There are many different mortgage loan programs available, with different qualifying guidelines and interest rates. It's essential to know your mortgage loan options because the terms of your loan can ultimately determine how much mortgage you can afford.


Fixed-rate mortgages offer a stable monthly interest rate and payment over the life of the loan. Adjustable-rate mortgages offer a low initial interest rate that is fixed for a short period, generally 5 to 10 years. Other loan programs, including VA loans, FHA loans, or those offered by the Department of Housing and Urban Development (HUD), can also present favorable terms if you qualify.


Calculate How Much House You Can Afford:

Knowing your price range before you shop eliminates any surprises when you buy a home. An experienced mortgage lender can help you calculate how much home you can afford. If you aren't ready to sit down with a Loan Advisor, you can use a mortgage loan calculator to help you compare loan programs and terms.


When calculating your monthly payments, don't forget to include other home-related items, such as property taxes, homeowners insurance, and HOA dues, in addition to the interest rate. You'll also have to budget for upfront costs, such as closing costs, mortgage points, and home inspections.


Look at Down Payment Options:

There are many solutions if you don't have that much cash on hand for a down payment. For instance, some loan programs will allow the use of gift funds for a down payment. There are also loan programs that offer low down payments, like FHA loans, and even zero down payment options, like VA loans (for qualified buyers).


Another option is a down payment assistance program. There are several national programs, and hundreds of regional programs, that can assist you with a down payment.


Keep Closing Costs in Mind:

Closing costs are the fees associated with finalizing your mortgage loan and purchasing your home. They can include loan origination fees, title insurance, and appraisal fees, among others. It's essential to budget for these costs upfront, as they can add up to thousands of dollars.


Don't Forget About Property Taxes and Insurance:

When calculating your monthly mortgage payment, don't forget to include other home-related expenses, such as property taxes, homeowners' insurance, and HOA dues.


Work with a Professional:

Working with an experienced real estate agent and mortgage lender can make the homebuying process less stressful and more efficient. A professional can help you navigate the complex world of real estate and mortgage lending and provide valuable advice and guidance throughout the process.


In conclusion, buying a home is a significant financial decision that requires careful planning and preparation. By following these seven tips, first-time homebuyers can increase their chances of finding a home they love that fits within their budget. Remember to take your time, do your research, and work with professionals who can guide you through the process.

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