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First-Time Home Buying Tips
Purchasing a home will be one of the most important investments of your life, and can be slightly overwhelming and even a bit scary at times throughout the process. Here are some helpful tips to ensure that your first home purchase will run smoothly and be an exciting time of your life:
Save Up For a Down Payment
A majority of mortgage lenders will require a down payment of 5%-20% of the home sale price. First-time home buyers today may find it difficult to come up with such a large amount of cash, especially those who have recently graduated college with excessive amounts of student loan debt.
Luckily for young adults, home affordability and down payment assistance programs are offered by a majority of mortgage lenders.
Find the Mortgage That Fits Your Needs
It's important to find a lender that is willing to communicate with you on an ongoing basis. The first step in your home buying process should be to find a The First-Time Home Buyer Pulse revealed that saving for a down payment is a barrier to homeownership for many first-time buyers. That's why it's important to find a lender that helps buyers understand what they can afford and share what financing options are available. Today, mortgages are not one size fits all—to find the option that best fits their needs, buyers should discuss their financial situation with a lender they trust.
Factor Renovation Costs & Monthly Expenses
With today's low inventory of affordable homes for first-time buyers, many buyers will find themselves settling on a home that requires renovations or upgrades. These costs should be factored in at the start of the financing process so buyers are comfortable with their down payment and monthly payment and will have money available to make improvements. For buyers who have not lived on their own or for those who previously rented, the added costs of running a household can be a shock. Monthly costs for utilities, homeowner's association fees, cable, and Internet, can add up quickly. Factoring these expenses in at the beginning of the mortgage financing process can help borrowers better assess their overall budget and a realistic monthly mortgage payment.
Educate Yourself
Perhaps the single most important aspect of purchasing a home is to fully understand the mortgage and the overall home-financing process. Take advantage of educational courses offered by local financial institutions and government programs. In fact, TD Bank offers a First Time Home Buyer Seminar series that addresses all aspects of a home loan—starting with helping buyers decide if they're truly ready to own a home. Following that, the seminars share information on the criteria lenders use to evaluate a borrower, the documentation buyers will need to provide, what each portion of a mortgage payment goes toward, and the mortgage team that processes and approves the loan. These seminars are useful tools and provide valuable background for borrowers who are daunted or overwhelmed by the process.
While buying a home may feel overwhelming for first-time buyers, finding a lender you can trust will guide you in the right direction and help you prepare for the mortgage process.