Understanding Your Budget
For the first-time home-buyer, choosing the first home can be a daunting, intimidating process. There seems to be a lot of rules and regulations, many different loan programs to choose from, and a lot of fancy mortgage jargon that can leave a first-time home-buyer intimidated and fearful they will not qualify. In this blog post, we’ll go over several tips we recommend when starting the process of buying a home. The hardest part of the mortgage lending process, just like any real goal, is getting started.
Getting Pre-Approved
For the first-time home buyer, the housing market can seem full of beautiful dream homes that the potential buyer feels they cannot afford. It’s very important to understand exactly how much you can comfortable afford when buying a home, and a pre-approval from a lender can give you a great idea. We recommend getting a pre-approval before shopping for a home, so you know exactly how much your first home can cost. This allows for more comfort and less anxiety when it comes to choosing that first dream home, because you know you can afford it.Â
Exploring Multiple Options
We also suggest seeing more than one home. In the housing market, your first dream home may have multiple bids. Additionally, you can also be rejected outright by the seller or seller’s agent. While rejection feels bad at first, if you have multiple homes that you are looking to buy, it will lessen the blow. If the first time home buyer only focuses on one home, that home may lead that first time home buyer to spend more than they can afford because it’s their first dream home. However, spending too much for a home can lead to many problems down the road, and defaulting on a first mortgage is definitely what needs to be avoided at all costs.
Being Cautious at Open Houses
When attending open houses, try not to give too much information to the seller’s agent. First time home buyers can easily make the mistake of doing this, and potentially jeopardizing their chances for purchasing their first home. If a seller’s agent feels that you are not financially stable, for example, they may not accept your offer on the home. For example, if you’ve recently quit your job, even if it’s to go to another job at a different location, that may leave the impression that you’re not financially stable yet.Â
Financial Stability and Spending
Another tip that can be used for the entire first time home-buying process, not just the beginning, is to be careful with what you spend your money on and opening new lines of credit. If a first time borrower makes a big purchase with credit any time during the process, this can change the debt-to-income ratio, leading into a possibility of making them ineligible. This can kill deals, or delay closing by several months as the first-time borrower attempts to pay down that credit. Opening new lines of credit can also affect debt-to-income ratio, especially if you’re deciding on taking out a personal loan or buying a new car. These activities should wait until after the purchase of your first home, if necessary.
