Tips for First Time Homebuyers
Purchasing a home for the first time can be exciting. But the process of buying can sometimes be hard to navigate. There are quite a few steps from where you are now to the moment you’re moving in, but fear not, we’ve prepared our top tips to get you home as soon as possible.
Create Good Credit Habits
Credit history is crucial when it comes to qualifying for a home loan. Starting good credit habits before and during the home loan process should be a top priority for first-time homebuyers. “Pay your bills on time” may seem blunt, but on time payments is one of the simplest ways to achieve good credit. Another tip would be to keep credit inquiries low and do not open or close any new credit lines. Closing a card will increase the portion of available credit you use, which can lower your score.
Get a Preapproval Letter
Apply for a pre-approval letter when you’re ready to start house shopping. This letter is a lender’s offer to loan you a certain amount under specific terms. It also proves to sellers that you are a serious buyer, making your offer more likely to be considered.
The preapproval process is quick. A lender will pull your credit and review documents to verify your income. Keeping good records, such as your paystubs, W2’s and bank statements, will help your lender issue your preapproval faster.
Compare Mortgage Rates and Fees
It’s important to request loan estimates for the same type of mortgage from multiple lenders to compare the costs, including interest rates and possible origination fees. Doing so could save you thousands over the life of your loan.
Build Your Savings
One of the best features of the VA loan is its benefit of zero down, but that doesn’t mean costs aren’t associated with it. Boosting your savings to prepare for 2% – 5% of your total loan cost in closing costs is recommended so there are no surprises. Throughout the homebuying process, home inspections, appraisals, closing costs, etc., will all be expenses to save for.
It’s important to make sure there are no changes to your financial status during your homebuying process to help the process move smoothly. Avoid employment changes, large financial deposits, moving money around, and large financial purchases. There’s a lot to keep in mind when buying a home, but knowing what the process involves is a great way to keep yourself aware. Make sure to ask your lender any and all questions during the process!