First Time Home Buyers

Buying your first home is rewarding, and focusing on your destination in the end will be well worth the trip!  Here are some navigating steps to guide you.

​1. Get Your Finances In Order

​Before you look at a single house, you need to know your numbers.

Check Your Credit Score Early: A higher credit score (ideally 740+) secures lower interest rates.  There are many free sites online to help you get your results. If there are any errors, you can work on getting them corrected by contacting the credit bureau and the business that reported the inaccurate information.

Calculate Your Debt-to-Income ratio. Generally, your total monthly debt (including the new mortgage) should not exceed 36–43% of your gross monthly income.

Check Statewide Programs: As first time homebuyer, you may qualify for assistance with down payments and closing costs. Many counties and cities offer their own assistance programs.

​2. Understand The Costs

​Many first-time buyers only save for the down payment.  But be sure to also consider closing costs, inspections, homeowner association fees – if applicable, homeowner’s insurance and maintaining an emergency fund for future repairs.

3. Pre-Approval vs. Pre-Qualification

​There is a big difference, especially in a competitive market:

Pre-qualification: A quick estimate based on what you tell the lender.

Pre-approval: The lender verifies your tax returns, W-2s, and bank statements. Be sure to obtain a verified pre-approval letter.

4. Specific Traps to Avoid

The “Credit Freeze”: Once you apply for a mortgage, do not open new credit cards, buy a new car, or make large purchases. This can change your credit profile and may risk your loan approval at the very last minute.

Skipping the Inspection: Even in a “bidding war,” it is recommended to never waive your home inspection. It is your only chance to find out if the “dream home” has any problems.

Ignoring the HOA: If the home is in a Homeowners Association, review the rules and fees before purchasing. Some HOAs can restrict your ability to rent the home, keep certain pets, or even paint your front door.

5. First-Time Buyer Assistance

​You don’t have to do this alone. Look into:

FHA Loans: Lower credit score requirements and smaller down payments.

State & Local Grants: Many states offer “Down Payment Assistance” programs that provide help with your initial costs.

Mortgage Tax Credits:  Be sure to consult your tax adviser regarding potential tax credits when paying your mortgage.

​Pro Tip: When touring homes, look past the “staging.” Focus on the bones—the age of the roof, the condition of the electrical panel, and the slope of the yard—rather than the paint color or furniture.

This article is for informational purposes only and is not legal advice.  Anything noted can change with new rules and/or regulations.