Buying your first home can be an exciting experience. Yet, with that excitement can come a laundry list of items to address to ensure your purchase goes off without a hitch. Give yourself the best chance for success by following the tips for first-time homebuyers listed below.
Determine Home Much You Can Afford
Before you jump into looking at listings, or even begin your search, it is crucial to determine exactly how much house you can afford, without putting a strain on your finances. Start by looking at what it will actually cost you to cover your purchase. This calculation should include:
- The monthly mortgage
- Monthly or annual HOA fees
- Property taxes
- Homeowners insurance
Next, you need to take into consideration what it will cost you to maintain your home. Create a calculation for home expenses which includes:
- Home repairs and maintenance
- Utility bills
- Outside maintenance and cleaning
Once you have determined how much you can afford monthly, you will be able to narrow down a price range for a home that you can safely fit in your budget.
Whip Your Credit Into Shape
Having good credit can help you obtain a lower interest rate, and provide you with more loan options. Start a few months before you plan to apply by paying off as much debt as you can. Review your credit report and make sure you address any negative marks. During this time be sure to make all of your payments on time and keep any credit card debt below a 30% debt to income ratio.
Save for Your Down Payment
After you have determined how much you plan to spend on your home, you will need to organize the down payment. Many loans will require 20% or more money down, but if this goal doesn't seem achievable, your dreams are not off the table. There are many loan options that will allow as low as 5% down, but be aware that you will often have to pay mortgage insurance in this situation, so this should be included in your mortgage payment calculation.
Obtain Loan Preapproval
Even if you are confident that you should be able to secure a loan, you should always get a preapproval before starting your search. This will help you determine the price range you will be able to get a loan for. Additionally, some homeowners try to avoid showings where the buyer is not necessarily in the market and may require that you have loan preapproval to schedule the showing. It can also help alleviate hiccups after you have found your perfect home.
Help make your home buying experience fun and exciting, with as little stress as possible, by knowing what you can afford, saving what you need, and getting a start on your home financing. Want to find out more on available home buying options, or are you ready to take the next step? We Florida Financial is here to help. Contact us today to meet with one of our trusted mortgage lenders and get on track to make your home buying dreams a reality.