Buying your first home is one of the biggest financial decisions that you will likely make, which is why this process can feel overwhelming. Finding a home that suits your needs and that fits your budget can be a challenge, especially if you are in an active real estate market. The good news is that there are a variety of resources out there for first-time home buyers. There are first-time home buyer specialists out there willing to help you. Here are three things that you should know if you are about to purchase your first home.
Your Finances Matter
If you are buying your first home, the first thing that you need to know is that your financial history and your level of debt matter significantly. Before even putting in an offer on a home, you need to take stock of your personal financial situation. Most lenders are looking for buyers with credit scores above 640, though some will lend if your score is lower. A debt-to-income ratio that is lower than 43 percent is also something that lenders look for. If you are unsure if buying is a possibility, there are first-time home buying services available that can help you determine if buying is the right option.
Shopping Around is Key
Another thing to consider when buying your first home is that there are a variety of loan types and lenders to choose from. You will want to take a close look at your options before you decide to buy. FHA loans are a great option for first-time home buyers, as are VA loans if you qualify. If you are looking for a conventional lender, shopping around can help you find the best interest rates possible. Simply getting one extra quote can save you $1,500 while getting five extra quotes can save you $3,000 or more.
There Are Additional Costs
If you are seeking out your first mortgage, you may not be aware of the additional costs that come with buying a home. You have to factor in more than just your down payment and mortgage payments when buying your first home. Closing costs, appraisal fees, title insurance, and other fees will also apply when you buy a home, and these can quickly add up. For example, a $300,000 home will typically lead to anywhere between $6,000 and $15,000 in closing costs. Before buying your first home, you will want to factor these costs into your budget.
If you are planning on buying your first home, there are a few things to consider. First, your finances matter. You will want to make sure that you are able to afford your home and that you will be able to qualify for a loan. Shopping around is also key. There are a variety of lenders to choose from. You will also want to factor in additional costs, such as closing costs when buying your first home. For more information on the subject, speak to a home financing specialist near you such as Cornerstone Residential Mortgage.