Tips Every New Home Buyer Should Know

Start Saving Early

One mistake that many first-time homebuyers make is that they do not save enough money before starting the buying process. There are many costs involved in buying a house in addition to the mortgage payment you will need to make each month. Here are some of the main costs you should consider before buying a home:

• Down Payment - your down payment requirement will depend on the type of mortgage you choose. The average down payments range from 3% to 20% down. Saving early and putting more down will save you in the long run.
• Closing Costs - These are fees and expenses you will need to pay to finalize your mortgage and typically range from 2% to 5% of your loan amount.
• Move-in expenses - After you officially purchase your new home, it is important to have some money set aside for immediate home repairs, upgrades, and furnishings. AnnieMac Home Mortgage’s PerkPlans could help you save thousands of dollars during this step by offering discounts to hundreds of retailers and service providers.

Do Your Research

Once you’ve decided to buy a new home, be sure to thoroughly research before committing to a home or even a neighborhood. Read through listing websites, newspapers, and magazines to see which properties spark your interest. Take note of the changes in asking prices to get a sense of the current housing trends in specific areas. Also, if a house has been on the market for a while and keeps lowering in price, this could be a red flag that the home may have a lot of issues that are not mentioned in the listing.

Determine How Much You Can Afford

Before you start to shop for a home, determine how much you can safely afford to spend on a house. Use our affordability calculator to decide on a savings goal and how much you should save for your down payment. Our calculator can also help with setting a price range based on your current income, debt, and credit score.

Strengthen Your Credit

Your credit score is a very important aspect of the homebuying process. Your score will determine whether you qualify for a mortgage and can also affect the interest rate lenders will offer you. It is important to strengthen your credit score before looking for homes. Here are some ways to strengthen your credit:

• Get a free credit report from each of the credit bureaus - Experian, Equifax, and TransUnion. After looking over your report, dispute any errors that could hurt your score.
• Pay all your bills on time and keep your credit card balances low. Closing a credit card will increase your credit utilization, which will ultimately lower your score.
• Pay off large debt including student loans.
• Track your credit score to ensure that you are making progress in raising it.

Get Pre-Qualified and Pre-Approved for a Mortgage

Before you start shopping for a home, you need to know how much you can realistically spend. To do this, you need to get prequalified for a mortgage. Prequalification will tell you how much money your lender can lend you for a home. They will look at specific financial information including your income and amount of savings to determine the amount you can afford to borrow. This number will tell you the price range of homes you can look at.

After you get pre-qualified, you need to get pre-approved which involves providing financial documents to your lender so that they can verify your financial status and credit. Having a pre-approval letter shows home sellers and real estate agents that you are a serious buyer and can give you an edge over home shoppers who have not applied for pre-approval yet.

Find the Right Agent

A good real estate agent will make the homebuying process stress-free and will handle all the negotiations and closing processes. They will pick out houses that meet both your needs and your budget. Before you settle on a specific agent, get some referrals from other home owners and interview a few agents before deciding on the one for you. When interviewing agents, ask them about their experience in your desired neighborhood and how they plan to help you find a home.

We have partnered with HomeHunt to help our customers experience the best possible home shopping process and ensure that homebuyers find the best agent in their neighborhood. Contact HomeHunt today to get the process started.

Tour Homes in Your Price Range

Another common mistake that homebuyers often make is touring homes that are over-budget. This can cause homebuyers to fall in love with a house that they cannot afford. Also, a lender may offer to loan more than what you can comfortably afford, but this does not mean that you need to spend outside of your comfort zone. Set a desired price range and stick to it. Look at properties below your price range to give yourself some wiggle room during a possible bidding war.

Do Not Skip the Home Inspection

Home inspections are important when it comes to buying a home. Inspections are a thorough assessment of the structure and mechanical systems of a home done by a professional inspector. The inspector will look for potential problems so you can make an informed decision on whether you want to buy the home or pass on it. Make sure you attend the home inspection and ask questions to get a clear understanding of the home.

Create a Relationship With Your Mortgage Loan Originator

Most buyers think that the only person they need to work with during the homebuying process is their realtor. This is not entirely true. It is also important to create a relationship with your loan originator and to work closely with them during the entire mortgage process. Having an experienced and responsive loan originator on your team will make buying a home and securing a loan much easier.

Buy Home Insurance

Your lender will require you to buy homeowners insurance before closing the deal on your new home. Home insurance covers the cost to repair or replace your home and personal belongings if they are damaged by an incident stated in the policy. You will want to buy adequate home insurance and enough of it to cover the cost of your home in case of an unforeseen circumstance or major destruction. Protecting your home and your assets should be a main priority and one that can be protected under homeowners insurance.

In Conclusion

At AnnieMac Home Mortgage, we understand the importance of having not only a great realtor, but a great loan officer as well. The mortgage is a major aspect of the homebuying process and we are here to help with every step of the journey.