Transitioning from an apartment dweller to a homeowner can be a complex, daunting, and downright scary step, but it doesn’t have to be. Homebuying can be an exciting – and dare we say “fun” experience. But the process can be a little complicated. There are decisions to consider, steps to take, and legal documents that, at first glance, can be a little confusing and intimidating. Luckily with a team supporting you — your family, real estate agent, and home financing loan officer — it’s all good.
That said, the home buying experience is likely to go even more smoothly if you are well prepared. So we gathered some tips to help you get in the right mindset. Let’s get started.
Correct your credit score
It’s not a good idea to dive into the idea of becoming a first-time homebuyer without first knowing what your credit score is or what your credit score should be for a particular home loan. Good credit scores are crucial to the homebuying process. According to NerdWallet, a credit score of 620+ should qualify you for a mortgage, but government-backed loans may allow for lower scores.
Maintaining a good credit score proves to a lender that you’re likely to stay on top of your loan payments: that you’re a low-risk borrower. Some things to ask yourself when you’re trying to improve your score should include:
- how frequently over the last two years you’ve applied for credit
- how long you’ve had a credit history
- the type of credit you have (i.e., credit cards, student loans, car loans, etc.)
- how much credit you’re using compared to how much you have available to you
- whether or not you’re making credit card payments on time
Understand that total $$$ picture
To set and stick to a realistic homebuying budget, you need to get past the asking price. A more accurate budget goal should include the down payment, closing costs, and what your output can be expected to be (the mortgage payments, insurance, and property taxes). Don’t forget to factor in the potential costs of ongoing home maintenance that can fluctuate from year to year.
Another trick to seeing if you can handle the total costs of buying a home is to calculate regularly recurring expenses into your budget. This can include your phone bill, internet costs, student loan payments, car payments, car insurance, and more. Once you’ve calculated how much money goes toward those payments, you’ll learn how much is left to go into your new home. For a deeper dive on tips for setting — and sticking to — a home buying budget, check out this recent blog post.
Ask for help if needed
Don’t default to the conclusion that buying a home is beyond your means. Many states offer first-time homebuyers a number of mortgage assistance programs. You can check out our shortlist here or search for a more extensive state-by-state list here.
Fannie Mae or Freddie Mac loans are probably the go-to programs for first-time homebuyers who haven’t saved enough for a down payment but have good credit and steady job history. These are also known as Conventional Loans, but they are not the only ones that offer assistance to potential newbie homeowners. You may also qualify for an FHA Loan, a veterans assistance VA Loan, or a USDA Loan if you’re thinking of living away from the city. There are even home renovation loans for fixer-uppers and an energy-efficient mortgage loan that lets borrowers finance energy-efficient improvements with their mortgage.
Find a skilled real estate agent
As a potential homebuyer, you’ll be working with a buyer’s agent instead of the agent representing the property owner, who is the seller’s agent. Your agent can work with your loan officer to get the download on your home buying budget and then work with you to fully understand what you’re looking for in a house and where you want to live. You’ll also want to find one who has experience helping buyers find dream homes in your price range.
Because this probably is — up until now, the most expensive transaction of your life, you’ll want a real estate agent who can get you more for your money than you could by doing it by yourself. He or she should be a skilled negotiator, have a keen eye on local sales activity, be on top of the current housing inventory and maybe even know what’s soon to be on the market if it’s not already. Here are more tips on choosing a great real estate agent.
This is all about you!
Giving up your apartment and buying a home should not be stressful. Move at a pace that feels comfortable. Don’t succumb to pressure. And feel free to scout potential neighborhoods on your own — you don’t have to wait for your real estate agent to set anything up. Most importantly, remember that you’re in charge — but you’re not alone.
With Movement Mortgage working with you, you have professionals at your disposal who do this every day and are always ready to serve you. To get pre-approved for your home loan, contact one of our local loan officers to learn what else you’ll need to prepare for and to discuss which program might be right for you. Or apply online with the Movement Mortgage Easy App. This tool will help you get pre-approved quickly by letting you upload all required documents straight into the app. Happy home buying!