Before you get started with buying your first home, it is a good idea to know what to expect. The market for homes is hot right now and navigating the process can take some time. Being prepared with the right tools and putting your best foot forward from the start will make this home buying process easier and can help you get into the home of your dreams.
Some of the tips that you need to follow as a first-time homebuyer include:
Get Your Finances in Order
It is a good idea to get your finances in order before you decide to purchase a home. If your credit score is a mess, then this is the time to get it fixed before a mortgage lender takes a look. Cutting down on debts, working on your emergency fund, and making on-time payments is a good start.
Consider how you will handle the closing cost and down payment too. You can start to save up for this or see if you can borrow from a family member. If you do the latter, consider having them write a gift letter ahead of time so you can give this to the mortgage lender to prove where the funds came from.
While you are at it, make sure that your finances are ready for owning a home. Set aside about 1% of the value of the home each year to help cover some of the unexpected repairs that come up and can keep you from using your credit card. Do not change jobs right now because lenders like it when you have a stable record with your income.
Learn About the Different Mortgage Programs
While a conventional mortgage with 20% down will be one of the easiest mortgages to choose, with the fewest number of hoops to jump through, gone are the days when this is expected, especially for first-time homebuyers. There are many great options you can choose based on your income, credit scores, and even how much you want to put down.
Some mortgage programs are based on the amount of money that you want to put down, with options from three to twenty percent down on the home. Some are designed to help those with lower credit scores become homeowners as well. Some even allow you to have a higher debt to income ratio, making it easier to get a home when you have more debt.
Always shop around to see which program is the best for you. There are so many options and it is a good idea to compare them to see which will make your dream of homeownership a little bit easier overall. While you may not be able to qualify for the conventional mortgage, all of the other options could make it possible.
Shop for the Best Mortgage Rates
You need to get pre-approved before you put any offers in on a home, so take the time to shop around and find the best rate before you get started. Comparing mortgage rates to three to five lenders can help you get a lower interest rate and save a lot of money over the length of your loan.
While you are shopping around, you need to compare a number of factors, not just the interest rate. Consider the lender fees, the annual percentage rate, and more to help you make a decision. The interest rate available can change daily, so collect the different estimates that you need on the same day.
Looking for a Home
It is a good idea to pick the neighborhood that you would like to move to ahead of time. Think about whether you want an older or a newer home and which school districts and extra amenities need to be present for you to enjoy that area. Making a list of the things that you must have in that location can make shopping easier.
You should then look for the right real estate agent in Cincinnati Ohio. They will be your representative during all of this and can be there to make sure you find the right home for the right price. They will know about new homes as soon as they are available and can even step in during negotiations to help you get a good deal and win the bidding war.
Buying the Home
In today’s tough market, it is hard to find the right home and get it before everyone else. Some of the things that you need to consider to help make things go your way include:
- Move fast on an offer: It’s a seller’s market. This means that you do not have a ton of time to make an offer and you need to make fast decisions.
- Get an inspection: It is tempting to wave this to get the home that you want, but these inspections can bring up important issues with the home. If the issues are large, you will be able to walk away from the contract and not get stuck with them. You can find these issues and negotiate them with the seller before closing.
- Be ready for the closing: You will need to gather up the funds and get through the closing disclosure to help finalize all of the figures a minimum of three business days before the closing. A few other things you need to avoid during this time include:
- Making large deposits into the account outside of your paycheck
- Charging a new credit card
- Taking out more debt than you had at the beginning of the loan process
- Changing jobs or you could end up losing out on the loan and not getting the mortgage.
Getting Ready to Purchase Your Home
There are a lot of things to balance when it is time to go shopping for your first home. But when you follow some of the tips above, you will be able to get it done and move into a home you love.