Congratulations on taking the first steps towards purchasing your first home! Initially, the process can seem a bit overwhelming. There is an enormous amount of information available & everyone seems to have an opinion- from family members, friends, and co-workers to internet websites and various organizations and entities. The most important information we would have you take away from the First Time Homebuyer guide we’ve put together below is:
Below is a list of steps, considerations & resources to assist you, a first time home buyer, in efficiently navigating the path to home-ownership.
Buying a home is both an emotional and financial decision. Buying a home for the first time should involve a lot of research and thought. Home buying is one of the most important & infrequent decisions you will make in your life. Below are some things to consider when evaluating whether you’re ready to become a First Time Home Buyer.
Why do you want to buy a home?
The emotional component. Determine why you want to buy a home. If you have partner, have conversations to make sure you understand each other’s motivations - both for today and the future. Some considerations include:
What Financial Considerations Should First Time Home Buyers Evaluate?
There are many financial considerations to take into account when buying your first home. Be cautious if the prime motivator is to take advantage of an investment opportunity and you are planning on a quick flip of a home you can’t really afford or don’t like. Below are several financial perspectives to consider as a first time home buyer:
Putting together a strong team of professionals will serve you well as a first time home buyer. This is probably the single most important piece of advice we can offer. Buying and selling real estate is complex. Navigating the forms, contracts, timelines, inspections, pricing & negotiations, financing and closing process all require experience. Your Realtor® and Mortgage Banker should be Licensed Professionals, governed by state-laws.
Additionally, while surfing online listings or thumbing through local real estate listing publications is a decent place to start; all properties are unique, and a good Realtor® will have the tools available and local expertise to help you find the best property for your needs & prove to be a valuable advisor when negotiating price and the details of your contract.
How Do You Choose a Good Realtor®?
What to Expect From Your Realtor®?
Most Sellers will not accept an offer without a Pre-Approval Letter & many realtors won’t take you on house-hunting tours without you first being able to demonstrate that you have been Pre-Qualified or Pre-Approved for the price range you are looking to purchase in.
Selecting a Professional, Licensed, and Experienced Mortgage Banker who is willing to step you through a FREE, thorough Pre-Approval Process is imperative.
A thorough Loan Pre-Approval is the most prudent step you can take to ensure a successful process.
Predicting accurately the financial details for your transaction is determined by the quality of your Mortgage Pre-Approval process. Your down payment requirements, monthly payment, and closing costs, are all determined by the type of loan and terms you qualify for. Cutting corners at this step can cause significant changes to your numbers at closing.
Getting Pre-Approved Offers The Following Benefits:
Pre-Qualification Vs. Pre-Approval
We cover this in greater detail in our Pre-Approved Vs. Pre-Qualified Things To Know . In short, many first time home buyers, and people in general, confuse getting pre-qualified with getting pre-approved for a mortgage.
A Pre-Qualification is worthless. The verbal numbers that are provided can differ greatly from the actual numbers an Underwriter will use to calculate your income, assets, debts and credit. by an underwriter.
For Example: A potential borrower is employed by a family member and currently earns $5,000mo. This amount is given during a pre-qualification for a loan. It turns out that because the borrower works for a family member, and the borrower is applying for a Fannie Mae loan that for underwriting purposes the income needs to be averaged over the past 24 months and the allowable income is only an average of $3,500/mo.
The scenario resulted in a borrower having to apply through the FHA Loan Program which has less stringent Income vs. Debt requirements and substantially changed the borrower’s monthly payment.
A thorough Loan Pre-Approval Process will include a discussion on:
Select Home Lending offers FREE Pre-Approvals!
We believe strongly in working with our borrowers up-front to get a clear understanding of what programs and options you will qualify for & what the expected monthly payment and closing costs of your transaction will look like.
Armed with a Realtor® who knows your local market, and a strong Pre-Approval letter and grasp of your budget, you are ready to start seriously shopping for homes!
Budget → Location → Neighborhood → Size & Property Type → Condition
Budget – By this point you should have a comfortable feel for what you can afford. This will help your realtor narrow the list of properties down for you to visit during your house-hunting tours.
Location & Neighborhood – Based on your conversations and considerations discussed in Step 1, your realtor will show you homes in your budget in the communities & neighborhoods you are interested in.
Size & Property Type – Based on your budget, your current & future needs, and value, you and your realtor will determine which property type and size of home will best suit all your personal and financial considerations & needs.
Condition – As you hone in on particular properties, make sure you pay attention to the condition of the home. Is it move-in ready? Will you need extra money to pay for work to bring it up to the condition you need? How is in comparison as a value to other similar properties in similar/better/worse condition?
Once you’ve found your home, you will need to make an offer. Here are several items to assist you when it comes to deciding on how much to offer for your new home & evaluating the Purchase Contract.
Review the Contract Dates with both your Realtor and Mortgage Banker. Make sure all
three of you are on the same page. You don’t want to have to renegotiate these items after it is already signed.
Now that you’ve signed a contract, you’ll need to go through the Processing & Underwriting of your loan. Click Here to Visit Our Overview of the Purchase Loan Process From Application to Closing for detailed information on the loan process and Helpful Hints for Closing.
Additional Resources
Homes for Sale
Tips For a Successful Purchase Transaction – Some Do's and Don’ts
Mortgage Calculators
How Much Will My Monthly Payment Be?
Rent Vs. Own Mortgage Calculator
Loan Comparison Mortgage Calculator
Amortization Schedule Mortgage Calculator
Purchase Transactions – What is TRID? & How Can it Affect My Closing?
Special Purchase Transaction Types
Short Sale & Foreclosure
REO Property Purchases
New Construction Properties
Special Mortgage Considerations When Buying Condos
Homepath
Special Types of Mortgages
FHA Mortgages
VA Loans
Jumbo Loans
Homepath
Mortgage Comparison Tool
Fixed Rate Mortgages
Adjustable Rate Mortgages
How To Read Home Purchase Contracts
Seller Credits To Closing Costs
Lender Credits To Closing Costs
What Will My Closing Costs Be To Purchase A Florida Home?
Hints For A Successful Closing
Leverage your investment and use the equity your home has gained over the years
Good for
Renovating your home
Paying down high-interest debt
As an established homeowner, you can improve your financial security by refinancing to a lower payment
Good for
Lowering your monthly outlay
Planning for retirement
Learn how the home buying process works with our mortgage Refinance into a shorter term so you can pay off your mortgage soonere tools and resources page
Good for
Reducing the amount of interest you’ll pay
Becoming mortgage-free faster
Get Your Personalized Low-Rate Mortgage Quote Now