When it’s a seller’s market, homes for sale move quickly. Before you get your heart set on a home, make sure you’re ready to buy. If you’re a first time home buyer, the process can be overwhelming. Before you even start shopping for a house, here are some smart first home purchase tips to make the process smoother.
Start Saving Money to Buy a Home
Some conventional loans are available for as little as 3% down payment, if you have exceptional credit, but if you can come up with 20% down payment, you avoid paying private mortgage insurance, which costs you extra each month. You’ll also want to have closing costs, moving expenses, and an emergency account for unexpected and unplanned expenses.
Get Your Credit in Order
Get copies of your credit report and make sure it is accurate and up-to-date. Try to reduce your debt-to-income ratio to about 36%. You may not want to close any credit accounts but do get them paid down. You don’t want to add new debt to buy a car or spend money on new furniture while you’re in the market for a home. Strengthen your credit to make sure you qualify for a mortgage as a first time home buyer.
Research First Time Home Buyer Assistance Programs
The Texas State Affordable Housing Corporation offers mortgage loans, down payment assistance grants and tax credits to eligible first time home buyers. TSAHC is a 501(c)(3) nonprofit that supports affordable housing in Texas. You will still need to find a lender and real estate agent, but TSAHC has educational resources and information that can help you secure a mortgage.
Get Preapproved for a Mortgage
A preapproval letter can give you an edge when you’re shopping for your home. It’s an offer by a lender who will give you a mortgage under certain terms. It demonstrates that you’re serious and ready to buy a home. Your lender will pull your credit and go through your financials. If you aren’t quite ready, you’ll know what you need to do to shore up your situation. If you do get preapproved, you’ll have a better idea of how much house you can afford. Don’t think that you need to buy a home for the full amount you’ve been prequalified for. Look at your monthly mortgage payment and income to determine how much you want to spend on your first home purchase.
Find a Real Estate Agent
Your real estate agent is a valuable asset in your search for a home. Good agents offer first home purchase tips and advice through the entire process. Look for an agent with experience helping first time home buyers. Real estate agents have access to the MLS, a database only available to professional agents and brokers.
Buying a home is a big investment, so make sure you are ready to take the next step. Contact us when you are ready to start your search.