Three Must-Know Tips for First Time Home Buyers

Three Must-Know Tips for First Time Home Buyers

Buying a house for the first-time can inspire a range of emotions. On one hand, choosing a new home is a deeply exciting experience. Yet due to its length and complexity, the process can also inspire feelings of mild stress or anxiety. Homes are large investments and a serious commitment, and the prospect of missing out on the house of your dreams can be deflating.

Fortunately, there’s a way to help ensure the process remains a happy and positive experience: By doing your homework and getting prepared.

To help make your first time homebuyer experience a great one, let’s review three essential tips for navigating the process.

Make sure your finances in order

Financing a new home is no minor task. You’ll need to have all of your financial documentation (bank statements, tax info) in order and ready to go when you begin the mortgage process. Even more importantly, the state of your credit will largely determine the terms of the loans you’re offered, including the interest rate.

To a layperson, the difference between a 3.5 percent rate and a four-percent rate may seem almost negligible. The truth, however, is that even a half point will save you a significant amount of money. Consider this: If you buy a $300,000 home and take out a $250,000 mortgage over 30 years, you’ll end up paying more than $175,000 in interest. That same loan at 3.5 percent would only cost you $150,000 in interest — a savings of $25,000.  Saving a point or a point-and-a-half would increase your savings to an even greater degree.

Paying less in interest means you’ll have more money for other life essentials, including upkeep and improvement of your new home. This is one reason why you should consider paying down your credit card debt and taking other steps to improve your credit score before buying a home.

Investigate all relevant programs and options

Did you know that your status as a first time homebuyer may entitle you to special programs and incentives that make the process easier and less expensive? These programs include loans backed by the U.S. government that are designed for people who don’t have the money on hand for the typical 20-percent down payment. Along with federal loans, there are a variety of state programs that are designed to assist new homebuyers as well.

There are also targeted programs that help specific groups of first time homebuyers. These include the Native American Veteran Direct Loan, loans from the U.S. Department of Veterans Affairs, loans designed to help rural borrowers from the U.S. Department of Agriculture and the HomeReady program from Fannie Mae, which is specially tailored for first time homebuyers who may need additional assistance with qualification.

Partner with the right real estate firm

Buying a home is a serious financial commitment. As such, it pays to have someone with expertise on your side. The right real estate agent or agency can help make the home buying process easier to navigate by helping identify the right homes for you to consider and helping you make the best possible offer. If issues arise (as they often do), the experience of a talented real estate agent can be invaluable when it comes to finding a resolution.

By finding the right real estate partner, a first time homebuyer can approach the process with confidence and peace of mind.

The takeaway

Buying a home is one of life’s great experiences, but it’s critically important to go in with a plan. By following the steps outlined above, you can help yourself find the home of your dreams.