First Time Home Buyers Tips

5 Things first time home buyers should know about purchasing a home.

Hello,

If you have made it this far that means you have successfully completed one of the most important first steps in purchasing a home. You have told yourself that it is time to take action, and have made the decision to do the research on how to become a home owner. So, welcome to the first step of your journey.

 

While it is important that you understand the difference of being a home owner verses being a renter. I’m going to give you a refresher on the two. We have all probably been renters at some point in our lives. Rather it was an apartment, townhouse, duplex, or house. The bases of becoming a renter is that you provide financial status and income to debt. Most property owner want to ensure that you are able to make the asking monthly payment. On top of that they want to know how responsible you are with paying bills. This is determined by you submitting a credit application along with background check. Once you are approved, the owner usually will have the renter to sign a lease agreement and like that your are officially a renter. The process is similar for home owners except instead of the owner being a person, it’s a Bank or Mortgage Lender. When applying to become a home owner, your financial status and debt to income are important factors that lenders consider before approval. They too would like to know if you are responsible and or making enough income to make payments towards the approved loan amount. While the approval process is a bit more in-depth. The process remains the same. So what is the major difference? Ownership of property and investment of funds. Renting is simply a promise to pay. There are no returns on the money invested in completing a lease agreement. While purchasing a home allows you to invest in you living status. Home owners have the luxury of potentially selling their home and making a profit or some or even all of the money they have invested in the time spent living in their home back. What better way to spend your time and money, if you could get a return on your investment Right!!!

Now that we have recapped on the differences and similarities of renting and buying, let’s start with tip number 2 Debt. Debt is one of the number 1 reasons lenders may not approve you for a home loan. Lenders always have their clients best interest in mind. Your debt to income ratio is very important and lenders do not want to add more than you can handle to your debt. So, It would be very responsible to pay off any or all debt if possible before applying for a home loan. The lower the debt, the better the chances of getting approved are. Now that you have cleared up your debt. On to number 3 Savings. Having a savings in place for when you apply is another important factor. This will show lenders that you are serious about making a purchase. Also, this will show that you are financially responsible. This can be a personal savings account or employers savings account like (401k). It is also important you have this savings available for possible down payment and closing cost. It is to my experience to have at lease 5-10% of the total home cost saved. This will help you with a smoother experience during your purchase. Keep in mind having an experience Realtor at your dispense will be very important for overseeing the negotiating process. Number 4 Miscellaneous Purchases. At this stage you should be pretty confident in your progress up to now. You have manage to clean up your debt and increase your credit score. This has definitely increased your changes of getting approved. You have also secured enough funds to ensure that you have enough too close. Everything is going just as planned and now you are thinking about all the different ways of decorating your new home. As tempting as it may be, making large purchases before you are approved and closed on your new home is a huge risk and a don’t do. Experience has shown me that making large purchases can directly affect your credit debt to income. Ultimately resulting in your loan not getting the approval needed. So if you have any large purchases that you are thinking of making like new car, furniture, appliances, etc. It is important to wait until you are completely finish with you home purchase before doing so. As added advice do not open any new lines of credit. This too can directly affect the lenders decision to approve you. Okay, we are at the home stretch. Number 5 Realtor. Realtor are an important ally to have during your journey of becoming a home owner. When it comes to the difficult question that you will have along the way, realtor are there to assist you. It’s not unusual for buyers to not know everything about purchasing a house. Your realtor will help you understands and make sound decisions when viewing houses. Because searching for a home can be very demanding of your time. Having a realtor is also like having V.I.P. services. You will have access to view just about any house that is listed on the market through MLS. This will make looking for a house less stressful so that you can focus on the more important tasks ahead. As you can tell by now buying a home can be a bit of a process however, being prepared can make a world of difference on the experience that you have,

 

It is my hope that this information reaches you and is of great help. Remember, I’m just a phone call away when you are ready to began your journey.

Thanks,