First-time Home Buyer Tips
Home-buying can be an extremely overwhelming experience for first-time home buyers. Interacting with different stakeholders such as realtors, lenders, prospective sellers, etc coupled with complicated procedures and anxiety of making the biggest investment of your life can easily get nerve-wracking.
If you’re looking to buy a home and need some expert help to make the experience smoother, here are some smart first time home buyer tips to help you navigate the process:
- Check and improve your credit report
A strong credit score and a clean credit report play an important role when it comes to any type of lending including your home loan. In fact, your credit report is one of the first things that the lender will access before processing your application any further. To make yourself Home Loan-ready as a first-time home buyer, check your credit report at least a few months before you plan to apply for the loan. Not only will this allow you the time to take the necessary corrective measures to improve your credit scores but it will also boost your confidence when you apply for your Home Loan.
- Save for a down payment
As a first-time home buyer, it is wise to start saving for your down payment as soon as possible. Depending on loan type you should expect to need between 0% and 5% of the purchase price for your down payment. With this in mind, I would recommend smart planning such as setting up an automatic savings plan, saving your bonuses or tax returns, etc
- Pay all your existing debt on time
One of the first things that your credit report and financial institutions look for, in the case of home loan financing, is your payment history. Make sure that you are making all of your current obligations on time. If you’re not, it doesn’t automatically exclude you but will likely lower your credit score.
- Get your credit card balances to 43% of the max or less
Having credit cards that are paid on time with a low balance is one of the best ways to establish credit. However, letting your credit card balance get to greater than 43% of the max will negatively impact your score; even if you pay it off monthly. I would first recommend paying down the balances but if the max is too low, you could always call to request an increase.
- Go with the right buyers’ agent
Real estate agents play an important role in the entire home buying process making it essential to choose the right buyer’s agent with the necessary skills, network, and right amount of knowledge about how the industry works.
- Make sure that your documents are in place
Whether you are salaried or self-employed, having the right documentation in place will speed up the process. Plan to have the following readily available:
Driver’s License
Social Security Card
60 days of bank statements
30 days of pay stubs
Most recent 2 years of W2s and Tax Returns