Three Tips for First Time Home Buyers

If you’ve decided to take the leap into home ownership, congratulations! As a first time home buyer you’ll enjoy these three important tips:
first-time-home-buyers

Check your credit report.

Check your credit report before you apply for a home loan. Under federal law, you are entitled to one free credit report per year from each of the national credit bureaus. Please note that the free credit report will not display your credit score, however, it will allow you the opportunity to verify the data and resolve errors. (It’s estimated that one in every 20 consumers have substantial credit report errors that could affect their ability to qualify for a home loan and/or obtain favorable rates.) The quality of your credit report is not the only factor determining whether or not you can receive a loan, but it does play a starring role.

Determine how much home you can afford.

Before you begin the search for your dream home, determine how much home you can afford. To do this you take your outgoing monthly liabilities and divided it by your gross income. This is known as Debt to Income and will play an impact on your qualification of a home loan. Generally you’ll want to make sure that your debt to income ratio is less than 41% although there are some options for higher if there are other compensating factors. Once you have an idea of how much you can afford then it is time to start getting organized.

Get with a loan officer that is knowledgeable.

Before you start looking for homes it is important to discuss your desires with a knowledgeable loan officer. He/she will look at your situation, verify some data and make recommendations based upon how an underwriter will view the file. There are a variety of loan programs, even some specific to first time home buyers so make sure to work with an expert. Do not start looking at homes or putting offers in until you have more evidence that you can afford and qualify a home in a particular price range with a particular loan program. This will save you time and a lot of emotion. We recommend you go out with a pre-qualification letter so that you and your eventual real estate agent can look at homes with confidence knowing that you are pre-qualified.

 

One comment on “Three Tips for First Time Home Buyers”

  1. I like how you mentioned getting a pre-qualification letter when buying a house. After much deliberation, my husband and I have decided that we’re ready to move into our first house. I imagine that getting pre-qualified would provide some peace of mind about being able to afford a house, so we’ll look into doing that.

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