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You are thinking of becoming a homeowner. The thought of having a space of your own sounds exciting. But then, the anxiety of how will you actually buy a home sets in. Where do you start? Do not worry - we are here to help. Here are a few first-time homebuyer tips: 

How much house can I afford?

The conditional pre-qualification is the first step toward determining how much you can afford. This is a quick process that relies only on the information that you provide to the lender. It involves neither credit checks nor a full financial analysis by the lender. Get started by clicking the blue check your buying power button here.

The next step is the pre-approval process, where the lender performs credit checks, income verification, and other qualifying steps to confirm credit-worthiness. It is the best way to determine the numbers that are right for you. Early in your search, you can identify any potential hurdles and focus only on homes truly available to you.

Remember the following:

DOWN PAYMENT - The myth that you have to have 20 percent for a down payment is long gone. There are several loan programs that require less than a 20 percent down payment and you can also get help through down payment assistance programs!

CREDIT - While credit plays an important role in determining how much you will qualify for, it is certainly not the only factor. Indeed your mortgage decision will be based on many factors. In addition, there are several programs specifically designed to help clients with limited credit.

What costs should I expect when buying a home?

EARNEST MONEY DEPOSIT - This is done upfront at the time of the contract offer.

APPRAISAL COST - This is done upfront at the disclosure appointment with the lender.

DOWN PAYMENT - Minimum investment required (if applicable).

CLOSING COSTS - Costs incurred to get your loan processed, approved, and closed (i.e. appraisal, underwriting fee, title fees, etc.)

PREPAIDS - Upfront property taxes, insurance, and prepaid interest. If you have less than 20 percent down (or obtaining a FHA, USDA or VA loan) you are required to set up an escrow account for your future tax and insurance bills. You are also required to pay for a one-year insurance policy to the company of your choice along with some prepaid interest which is like a partial mini house payment for the remaining days in the month that you close on your new home.

HOME INSPECTION COST - This is an optional charge. Please review with your real estate agent to decide. Not credited to the down payment, closing costs or prepaids.

WARRANTY COST - This is an optional charge. Please review with your real estate agent at the time of the contract offer. Not credited to the down payment, closing costs or prepaids. 

What kind of home do you really want?

Single-family, multi-family, condo, co-op, victorian, colonial, cape, split, ranch, cottage, cabin, teepee...home types and legal distinctions are plentiful. Whether you are open to several styles or have your heart set on only one, narrowing your search will save time and prepare you to act when the perfect home hits the market.

Where do you want to be and how long you want to be there?

You’ll want to strike a balance between buying what you can afford and buying what will accommodate your needs for longer than just the first few years. Assess your plans for growing your family and how your income might grow to match. Planning ahead is especially important in today’s market when trading up tomorrow may mean both a more expensive home and a higher mortgage rate.

How does the home loan process work?

This is a time when the Internet doesn’t have all the answers. The process varies for many reasons, including area and custom. Generally, purchases include an offer, acceptance, inspection, contract, loan application, appraisal, title, loan approval, closing/funding and moving in. Many little steps can fall in between, and the process won't always occur in a given order. It pays to speak with local experts early.

We hope these tips help ease your stress. Ready to start your journey toward homeownership? Reach out when you're ready, and one step at a time, we will help you to build your budget, navigate the process, and apply for a loan. Contact us today to start your journey toward homeownership.