Tips for First-Time Home Buyers

Buying your first home is a major decision, but many of the common challenges first time home buyers face can be reduced or even completely avoided with some basic know-how. Here are some helpful tips for first time home buyers.

Costs and Hurdles to Expect

In many cases, a mortgage payment including property taxes and homeowner’s insurance can be less than what you pay in rent. The tax savings generated by the interest deduction (which constitute most of the payment in the early years of a mortgage) may keep the monthly cost slightly more than rent. However, you will be building equity with each payment.

Often, the biggest hurdle in the first-time purchase is cash available for the down payment and your closing costs. But even this obstacle is not insurmountable. If you are a veteran, you may be able to obtain 100% financing through a VA loan and many lenders offer 95% financing based on your credit rating.

Try to Pre-Qualify for a Loan (If Necessary)

If your income enables you to qualify for the necessary mortgage loan, you may be able to negotiate a contract in which the seller pays your purchase closing costs and adjusts the price upward so that you, in effect, finance your closing costs. But the loan appraisal will still need to support this higher value in order for the loan to close.

A good place to start the entire process is to visit with a local lender to “pre-qualify” and establish your maximum loan amount. This loan maximum, coupled with your available cash, will determine the price range in which you should look. The lender will also provide you with a list of items required to begin the loan application process. We can provide you with lender referrals if needed. As a first-time buyer, professional real estate assistance is crucial. We will work for you as a “buyer’s agent” and be your advocate in the transaction. In most cases, we will be paid out of the seller’s commission paid at closing, so you will not pay extra to be represented by us.