First Time Home Buyer Advice
Things could not be better for home buyers. The real estate odds are in your favor. There is low activity and this means low asking prices particularly on foreclosed homes which lenders are eager get off their hands. There are also a number of state and federal incentives that a first time home buyer can take advantage of to lower initial deposits and monthly repayments.
When buying that first home, there are some important factors to take into account. One is crunching the numbers to find out your financial situation. This means more than looking at your income to see if you can afford a mortgage. Make use of online mortgage calculators to see just how much you will be left with for your other expenses. Use them to see the bigger picture as well in terms of how much you will pay over the duration of the loan.
A first time home buyer needs to take into account all the costs that come with a mortgage and not just the amount that will be repaid monthly. There is the down payment, home valuation costs, application appraisal costs, closing costs and others. As you do the math, ensure that your emergency fund is adequate. Aim to have the equivalent of three months living expenses including the amount you are paying monthly towards the mortgage. This way, should anything happen to you or your source of income, you can keep up the repayments as you figure out your next step.
Assuming that you are in good financial shape, get the credit report to prove it. This is one of the documents that lenders will ask for first. Most of them require that mortgage borrowers have a credit score of at least 640.
Most first time home buyers would rather hide a credit score that is not so good from lenders. Yet most of them are ready and willing to work with borrowers to improve their credit score so that they qualify for a home loan. Work with them to get a good score otherwise you will not be able to qualify for a mortgage.
As soon you are approved for a mortgage, engage the services of a real estate agent. They will have updated listings of the houses on the market. With your specifications about the precise location, size, features and amenities you need, they will narrow down and speed up your search so that you will soon be moving into your first home.
Another piece of advice: educate yourself. Download "The Essential Guide to Buying Your First Home" at the button below. This free guide covers all angles of the home buying process from home appraisals (are they necessary?) to FICO scores (what's a good credit score for a first time home buyer?) and more.