Deciding to purchase a home is a big financial commitment. It can be exciting, but also a little bit scary or overwhelming to some. Some First-time buyers may not know where to start, luckily for you we have compiled a list of some extremely helpful tips to guide you in the right direction.
Here are 8 tips to prep you for your journey
Speak to a lender first!
Once you have made the decision that home ownership is right for you, you should reach out to a lender to determine if you are ready to purchase now. Not everyone is in the same financial situation, speaking to a lender first will let you know where you stand financially. A good lender will not only advise you of your qualifications but if you are not ready, they can help create a road map to reach your goals. IF you are unable to move forward your lender should offer guidance and advice on exactly what you need to do in order to get approved in the future.
2. Do not Finance anything before your closing
How much money you owe in liabilities will affect the amount of home that you can afford. Once you receive your Pre-Approval from your lender you should avoid financing anything else until after you move in. Stay away from: Co-signing any loans for anyone, buying furniture or other items for the home, do not open any new credit lines unless instructed to do so by your lender. Making any financial changes after you have been pre-Approved can negatively impact your qualification.
3. Work with your Lending Team
Your Lending team will need to request supporting documents in order to finalize your home loan. It may seem like they are requesting lots of documentation, however I can assure you that they are on your team and 100% and want your loan to close just as much as you do. Be sure to send in the documents that they request in a timely manner in order to avoid delays in your closing. You and your Lending team need to remain in "Lock Step" from pre-approval all the way to Clear to Close. Make sure when sending in your supporting Documents that you send in legible copies of all documents, submit non expired Identification docs, submit ALL pages of bank statements (even those left intentionally blank), submit the most recent paystubs and bank statements.
4. Don't forget about Closing Costs
It is extremely important to understand all of the costs associated with the purchase of a home. Talk to your lender about your down payment, closing costs, appraisal fee, home inspection fee and any other fees or costs associated with your purchase. Be sure to save up enough money to cover all of these expenses so there aren't any surprises at the closing table. A valid home loan advisor should be able to break down the total out of pocket costs for each transaction. Closing costs are comprised of lots of different fees and costs that vary depending on the transaction. Closing Costs may include fees related to underwriting, real estate commissions, taxes and insurance premiums, and title/ recording fees. Obtaining a mortgage loan has lots of moving parts and there are lots of third parties that are necessary to complete the transaction.
5. Find the Right Realtor
Working with the right Real Estate Agent is paramount in your journey. A good agent will share knowledge on market conditions, housing inventory, and possibly the neighborhood as well. They will assist you in making a decision, structuring your offer to a seller and they will negotiate on your behalf. Your realtor should be responsive and courteous, they will play an integral part of the process and need to be available to show you properties and answer any questions that you might have.
6. Make sure you can afford the monthly payments
Just because you get a high pre-approval does not mean you need to buy the most expensive house that you can. Make sure the monthly payment is one that you can afford. You should factor in the "Total Housing Expense" in your budget. The total housing expense includes property tax, homeowners' insurance, mortgage insurance, HOA fees (if applicable). Be sure to look at your Loan Estimates and Closing Disclosures for a full break down or ask you lender about the total housing expense for your loan.
7. Don't get emotionally attached to the House
It is important to understand that your first offer may not get accepted by the seller. As a matter of fact, depending on the market conditions it may take a while to get your offer accepted. Don't get emotionally attached to any of the houses that you tour or make offers on. Nothing is set in stone until you get your keys! Keep your head up and keep looking.
8. Vet the neighborhood
Make sure that you visit the neighborhood at night or on weekends to make sure it is a good fit. Look online at nearby school ratings, or crime maps to get the bigger picture. Be sure to do your due diligence when researching the neighborhood.