For first time homebuyers, the entire process of purchasing a house can seem intimidating. In order to make the process less confusing, we have assembled some tips concentrated on two main areas; searching for a property and the down payment. With these tips, first time home buyers will be armed with more complete information to make more informed decision.
Shopping For A Home
There are many reasons why people want to buy a home vs. rent. Regardless of age, incoming levels or location, there are some basics that apply to all buyers everywhere.
- Get an Agent That works for YOU – Real estate agents can work for the seller of a home, or the buyer, or both. It is better to work with an agent that is committed to helping you find a home. Your agent should have your interests at heart and be on the lookout for any red flags when it comes to particular homes.
- Make sure to buy a home that allows for change – An entire article could be written about choosing the right sized home. Some buyers are young and plan on growing their family. Other buyers are married with kids and may not plan to have any more kids. Whatever your situation, buyers should purchase a home that has a bit more room than needed at the time of purchase in case something changes in the near future.
- Do not purchase over your budget – Many homebuyers have entered into a mortgage contract with the idea that they would work extra hours, or give up some non-essentials, in order to afford a home that was slightly outside of their budget. This is NOT a smart idea. One serious accident, or downsizing at work, could potentially prevent you from affording that high mortgage payment. It is better to get something closer to the middle of your budget and live comfortably with the payment rather than living stressed out over the payment.
Guidelines for Down Payments
There are a few key things to consider for the down payment of a home.
- The sooner you start saving, the better off you will be – Whether you are planning to pay 3.5% down on an FHA loan or 20% down on a jumbo loan, the sooner you can start saving money that will be devoted only to the down payment of your homeew, the better off you will be. One saving strategy that has been proven to work, is to have a certain amount directly deposited from each paycheck so that you never forget to add money to your savings.
- Compare different mortgage loans – Some loans, like a VA home loan or a USDA home loan, will allow buyers to purchase a home with a zero down payment. This allows buyers to use their savings to pay for the closing costs and moving fees and hopefully have some cash left over. Other programs, like the Vendee Loan Program, FHA, or Fannie May HomeReady loan, allow for a smaller down payments under 5% to purchase a home. Paying only 5% down opposed to 10% or even 20% is a major difference on a typical home price of $200,000. Once again, this is where a mortgage loan officer can provide more specific information about the different mortgage loan opportunities that fit your needs.
- Ask lender about down payment programs – Certain states offer assistance programs to assist with the down payment. Some programs only help with the down payment while others will help with the down payment and closing costs. Each program has its own benefits, so it is best to speak to your mortgage lender to determine what programs are accessible and which ones will work with your particular situation.
Hopefully these tips can help you to determine which loan is right for you and an approximate amount you will need for a down payment.
Final Thoughts On Tips For First Time Home Buyers
As we discussed, it is clear that buying a home should involve the expertise of a good buyer’s agent as well as an experienced loan officer. With the input of these professionals and the tips outlined earlier, you should be able to decide which mortgage is right for you to determine a down payment and what to look for in your next house.
At Vendor Resource Management, Inc., our mission is to set a high standard in the mortgage industry. We are committed to quality customer service – putting the people we serve first. Our goal is to carefully guide you through the home loan process, so that you can confidently select the best mortgage for you and your family from the many mortgage options that are available today. After you select the loan that is best for you, we will work continuously on your behalf to help you achieve your dream of homeownership.