Congratulations on your decision to buy your first home! This is a great step to getting ahead financially and calling your home your own. The journey ahead of you is so much fun and truly an exciting journey and at times could be stressful too. So, as you go through this wonderful path here are basic guidelines you need to know before buying your first home.
1. Save enough money for down payment. Typically mortgage companies would require you to have at least 20% down payment, keep in mind there are also great programs out there for first time buyers such as FHA loan and VA loans that require low down payment from 3.5% to no down payment at all for veterans.
2. Check and know your credit score. It is very important to understand that you get better loan rates if you have a stellar credit score. So, make sure to pay all your bills on time and check your credit score for any discrepancies. Dispute any discrepancies with the credit bureau if you see one. This will save you lots of money down the road. A free tool for everyone that I would recommend and its completely free to check your credit score visit www.annualcreditreport.com . You may be able to view your scores from the 3 accredited companies – Experian, Transunion and Equifax.
3. Shop for a home loan. A common misconception that most people think of is that if they shop for a loan their credit scores will decrease each time they shop for a loan. This is not entirely true. If you shop a loan within 30 days and contact as many lenders during that time, the odds are the credit bureau knows you are shopping for a loan and will only treat it as one inquiry rather than multiple inquiries. Keep in mind, the banks have different structures on rates, points and other perks to attract you to use them for your mortgage needs. You may go online on big banking sites such as bank of America, Wells Fargo or even your local credit unions which offer better rates at times. Consider also that If you are a loyal Bank of America customer for instance, they give you better rates more than the average customer that are not banking with them. Another option is to contact your chosen real estate agent, they can recommend lenders that can work with you to get a loan.
4. Get pre-approved for the loan not pre-qualified. A lot of first time home buyers do not -understand the difference between getting pre-qualified versus getting pre-approved. Getting pre-qualified means, the bank is interviewing you regarding your finances and getting general information from you to get a feel if you can qualify for a loan or not. Then they tell you, you are prequalified. This is not what you want, you need to get pre-approved. Getting pre-approved means that the bank will be running your credit score, determining your income and expense ratio and your ability to pay them back. In return they will let you know if you are approved and tell you exactly how much you can spend to buy your first home. You will get an official letter from them letting you know that you are approved for a certain amount (example: $500,000). Which means you can now shop for a home up to $500k.
But wait a minute, do not rush out the door and go happy shopping for a home worth $500k. That is the maximum amount of loan they are giving you and that does not necessarily mean you should look for homes on that price range. Try to look for homes that are a bit cheaper and also meets your needs. If you find a home at a price point of let’s say $350k that would be ideal, remember you do not want to use all your money on just paying your mortgage. Eventually you will need money for other items such as shopping, going on vacation and of course most importantly save money for retirement.
5. Find a good real estate agent It is very important to contact a good real estate agent who can work with you every step of the way on your home buying process. At times you might get frustrated when you spot a beautiful home you really like and eventually you don’t get it as someone overbid you (in a sellers market). Contact an agent who specialize in the area you are looking into. They can help you determine good neighborhoods and recommend areas to look for homes according to your needs and criteria. A good agent who is knowledgeable in the area where you would like to live typically can find you the best deals and the home that will suit your needs.
If you are located in California and specifically looking for a new home around the area of Pittsburg, Antioch, Brentwood, Walnut creek, Concord and Martinez, feel free to contact me at 925-490-2555. I will be happy to assist you in finding your dream home. I am a real estate agent that specialize in this area. I call the east bay home for many years now and I am very knowledgeable and specialize in this market.
I hope this simple tip would help you find your forever home and buying your first home a reality. Don’t give up, you will find your dream home. Now is the time so take the proper steps to make your dream come true!
Century 21 MM DRE# 02062615 www.C21mm.com