First Time Home Buying - Are You Ready For Home Ownership?
Buying your first home is a turning point for many people. Transitioning from renting to owning not only gives a person more freedom and stability, but it is also almost a rite of passage. For many years, the buying of a home was the pinnacle of the American Dream; the status of landowner garnishing the dreams of so many immigrants who came over to this great country. However, while many people strive to buy a home, and find homes that are perfect for first-time home buyers, they are still hesitant to take the leap. Many first time home buyers have questions about the process which can make it all seem much more daunting. Let's cover some of the most common first time home buyer questions including some about qualifications, credit scores, and mortgages.
First time home buyer qualifications
While some lenders may have different requirements, we have found that the 3 most important qualifications are 1) a steady income, 2) a decent savings, and 3) a good credit score. Let’s take a quick look at them all to see what they really mean for a first time home buyer.A Steady Income
Your income is of vital importance when it comes to qualifying as a first time home buyer. This is because a home is a large investment and your lender will want to make sure that you can make the necessary monthly payments to pay it off. Without a steady income, a person could easily have a spotty payment history which is no good for a lender. So, if you don’t already have a steady income, that should be your first order of business.A Decent Savings
A savings account says a lot about a person’s financial situation. A decent savings account will show that you are thinking ahead and that you are diligent with your money. This will also show the bank that you have money to pay a down payment and to cover your monthly payments in the event that your income falters.A Good Credit Score
Credit scores are another very important part of buying a home, especially for a first time home buyer. A credit score, for those that don’t know, is a number that tells the bank how responsible you are with your money. The higher the credit score, the more responsible you look to the banks. You want to have a high credit score because banks will be more likely to lend you money, and will most likely be willing to lend you a larger amount than if you had a lower credit score.
The credit scores we have here in America usually range from 300 to 850. “Poor credit” could be considered anything below 650 while anything over 700 or 750 is considered pretty good (this is not a guarantee, the financial climate will cause these numbers to shift).
First time home buyer with bad credit
Bad credit (or poor credit) can be a bit of a stumbling block when it comes to buying a home. However, it will not dam the way. There are ways that you can buy a home even if you have bad credit. Some lenders, for instance, may be more willing to lend money to people who have lower credit. Then again, there are also programs that make it easier for people with low credit to buy a home. The best thing to do is to meet with the lender you think you want to work with and put all the cards on the table. Show them all your finances and they will be able to advise you on what to do to get into a home. First time homebuyers can get into a home even with bad credit; they just need to look at all their options and be willing to work to raise their credit if necessary. Now, they must also remember that this isn’t a guarantee, as we said, they may have to work to raise their credit.
How to get a mortgage
Getting a mortgage is actually a lot simpler than you might think. Essentially, you go to the financial institution you want to borrow from (whether it be a bank, credit union, or mortgage company) and meet with one of their loan officers. Their loan officer will walk you through all the steps for applying for a mortgage and even tell you how much they are willing to lend you. It is best that you do this process before you start looking for houses as this will tell you what price range you should be looking in. If you wait until after you have found your dream home to apply for a mortgage the lender may not be willing to lend you enough to buy it.
To get a mortgage before you start looking for a home, make an appointment with the financial institution’s loan officer, like we suggested earlier, and tell them that you want to talk about getting pre-qualified for a mortgage. They should then be able to get everything together as to make the appointment run smoother and move faster. When you meet with the loan officer, they will help you get a mortgage all set up. They will get all your financial information together and send it down to the underwriters who will then do a bunch of calculations to determine how much they are willing to lend to you. You will then take that amount back to your real estate agent and start your home search.
First time home buyers have a lot on their plate, but hopefully this piece has given you some better insight into the world of home buying and has better prepared you for when it is your turn. If you are looking to buy your first home, be sure to give us a call. Here at the Hughes Group of Silvercreek Realty Group, we have expert agents that know the ins and outs of the Boise real estate market better than anyone else. If you want to be able to come home to a house you own, then there is no one better than a Hughes Group agent. Call or shoot us an email today and we will set you up for real estate success.
We Can Help
You need a good agent who will work hard for you. Our real estate team is dedicated to helping you find the right home, at the best price. We want you to find the home that will make you happy and successful in real estate ownership.
When you hire us to help you buy your first home, we want to know what you want and how much you can afford. Then we'll find a way to merge these two priorities and find a residence that you'll enjoy owning.
Keep your objectives in mind when visiting a home. Sometimes the idea of owning a home can overwhelm your practical sense, so keep your feelings in check. Keep a list handy of the features that you need and want in a home, and judge each home by the list instead of by details that could distract you from your goal. When you're alone with your agent, you can go over the pros and cons of each home. We can help you stay on track while still keeping our eyes out for a great property.
Engage the services of a good real estate lawyer. We can recommend several lawyers in the area who might be a good fit for you. Interview them to ensure that you get someone you can work with. The legalities of transferring land ownership can be dodgy, and a lawyer can be your best defense against future legal troubles. A good lawyer can charge several hundred to over a thousand dollars for their services, but the thousands of dollars saved in legal fees later on makes this a good expense.
Make the offer. This can be a maze of "buyer", "seller", "chattels", "deposit", and "completion". We'll be happy to prepare the paperwork and go through it with you before submitting it. Remember, the seller may reject or counter your offer, so even at this late date, avoid setting your heart on the home you hope to own. You'll probably have to write a deposit check to the seller's broker that proves the seriousness of your offer.
Get all necessary inspections done. A home inspector will check for signs of harmful materials like asbestos, lead paint and mold. They'll also check for evidence of pests, faulty wiring and leaks. This is a crucial part of the home purchase. Not getting an inspection done means that you could be stuck in a home with a bad case of black mold and no recourse other than to pay for its removal. Inspections will cost a few hundred dollars, but again, this is more than worth it in the end. There are several inspectors in the area that we'd be happy to recommend.
Do a final walkthrough before closing the deal. We'd be happy to do this with you to make sure that everything agreed upon is completed prior to the final signing.
From the first interview that determines your requirements to the moment that you receive the keys, we can help you with the complicated process of buying a home. Don't hesitate to contact us to find out more about how we can make the home buying process easier!
Contact us for more information about first time home purchasing.