Tips for First Time Homebuyers

Tips for First Time Homebuyers

Buying a home is one of the biggest decisions you'll make in your lifetime. This big decision can be very stressful, especially for first-time buyers. We've put together a list of expert tips from our VP of Business Lending, Michael Farrar, to prepare you for the process. 

Start Saving
Most loan types require a 3-5% down payment. Some loan types do not require a down payment, however, you may still need money for closing cost not covered by the seller, home inspections or appraisals. It's important to start saving to help cover these costs. 

To start, you'll want to sit down and examine your budget. You might be surprised where you can cut back to start saving for that dream home. Consider "paying yourself" a mock mortgage payment into your savings account each month. This will not only help get you in the habit of making your payment each month, but will help you build the savings you need.  

If your loan requires a down payment, it's best to have the funds in your account for at least 60 days. If you receive the funds for your down payment from a blood relative, you will be asked to fill out a gift affidavit form. In some cases you may take out a loan for the down payment as long as the extra loan payment doesn't affect your debt-to-income ratio and it is secured by collateral. 

Credit History
Knowing your credit score and what makes up that score is important when looking to buy your first home. If you're thinking of purchasing a home in the near future, now is the time to take a look at your credit score. You can check your credit score for free one time each year without impacting your score. Visit a site, like If you've already gotten your pre-approval letter, talk to your lender about what you can do to improve your score.

Before buying a home, you'll need at least three reporting tradelines, or accounts. Car loans & credit cards are examples of reporting tradelines. To help maximize your credit score, try not to exceed a 30% line-to-limit ratio with your credit cards, meaning do not charge more than 30% of your maximum credit limit, and get rid of any disputes, collections, or outstanding balances.   

Talk to a Lender First
Once you're ready to buy, the first step toward making your purchase should be meeting with a lender to see what you qualify for and what payment amount works with your budget. After all, you don't want to waste your (or your realtor's time) looking at houses you can't afford. By getting a pre-approval letter, realtors and sellers will take you more seriously as you begin your search for a new home.

Your lender should be there to help you through the entire home-buying process. They can sit down and discuss the different loan types you quality for, your credit history (like how to improve your credit score) and provide you with other helpful advice along the way. 

Other Expenses
When you rent or lease, you typically pay one flat fee. When you own your home, it is important to remember other costs such as homeowner's insurances, property taxes, utilities and home owner association fees. You'll also have other expenses that come with keeping up your home like yard equipment and other maintenance equipment, such as tools, that you most likely didn't need before owing your own home.  

When you're ready to buy your first home, our experienced Home Loan Team is here to help. From getting you pre-approved to signing those final papers when you close, we'll be there to make the process run as smooth as possible. Click here to learn more about our mortgage options and how to get started today.   

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