In our last article, we covered what one needs to know and research in order to determine whether buying a home is right for them. For those of you that came to the conclusion that you should buy a home, this is the guide for you! We will go over down payment tips, home shopping, financing options, etc. so you have everything you’ll need to buy a home, besides a Realtor. That’s where we come in at Brown Home Group @ Keller Williams Advantage II Realty!;)
Mortgage Down Payment
As a home buyer, you have plenty of options when it comes to your mortgage down payment. In most cases, buyers put down at least 20% on their mortgage. Now, this number is very flexible but can have some conditions you may not prefer if you put down less than 20%, such as higher rates and having to pay for insurance. This is something you will have to play around with on your own, take a look at your finances and your savings account, from there you can find online mortgage calculators or have a talk with your lender!
Another thing you have to consider with this is your financing options. There are 3 main mortgage options
A conventional loan can require as little as 3% down, and will conform to the standard set by Fannie Mae and Freddie Mac (governement entities).
Sometimes as low as 3.5% and is insure by the Federal Housing Administration. FHA loans have their own sets of requirements, so make sure to discuss this option with your lender.
– VA Loans
VA loans are strictly for Veterans and their spouses (under certain circumstances). These sometimes require no down payment at all and can come with tons of different perks.
Again, there are tons of different options and choices to make for your mortgage. You can make a smaller down payment for a higher monthly payment, or maybe a much bigger down payment to achieve a lower rate/monthly payment. There are also multiple different state and federal assistance programs for first-time home buyers, consider applying for the ones in your area.
First things first, DETERMINE HOW MUCH YOU CAN AFFORD!! This is the biggest mistake people can make when shopping for a home. People will apply or shoot for a higher loan than they know they could afford to pay. Determine your budget, THEN start shopping around for mortgages and lenders. Once you find the budget that’s right for you, you’ll want to compare mortgage rates to find the best deal. Try comparing at least 3 different lenders to make sure you’re not leaving money on the table. Make sure to ask about discount points to lower your interest rates!
The next biggest thing you need to worry about is your credit. Credit is absolutely crucial to getting a loan, and your credit score is going to determine your eligibility and your rate. If it’s just you, cut any further activity on your credit, and do anything and everything you can to increase your credit score as much as possible. For couples, it can be a good idea to help each other. Consider helping your spouse fix their credit so you can both qualify for better loan terms and interest rates.
Pre-approval is something every home buyer should consider getting. Having a set loan amount to work with can make it easier for you and your agent to find you the home that works best for you. This also gives you leverage in the eyes of a seller compared to the buyers that did not get pre-approved.
Shopping for homes
When you’re shopping for a home, it’s best to have a buyer’s agent by your side. Not only will they have the resources to help you but they can get access to properties you cannot see! Luckily, at Brown Home Group, we take your best interest into consideration at all times. We want to make sure every bit of your wants and needs are met and you are satisfied throughout every step of your transaction.
Depending on your situation, you’ll want to look at different types of houses such as single-family, townhouses, condos, etc. Sometimes sacrificing space can benefit you by offering less maintenance and extra amenities. Ask your agent what the market conditions are, where the best locations are, etc.
Mistakes to avoid
When you’re a first time home buyer, there’s an endless list of mistakes that one can make. That’s why it is important to find experienced and knowledgeable agents to work with so you can minimize any issues or mistakes you make. Some of the most common mistakes go as follows:
- not budgeting move in expenses
- not budgeting closing costs
- not negotiating
- buying based on today’s circumstances
- not purchasing good home insurance
- getting the right home inspection
These are just a few mistakes that are made on a daily basis. Make sure you find someone to help you jump these hurdles and educate you throughout the entire process for your best interest.
Contact us here at the Brown Home Group @ Keller Williams Advantage II Realty to get a better understanding of how you can purchase a home ASAP! We would love to hand you the keys to the home of your dreams and look forward to working with you! Thanks for reading.
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