28 Nov First Time Home Buyer Preparation Tips.
Buying a home can be nerve-wracking, especially if you’re a first-time home buyer. Not only is it probably one of the biggest purchase of your life, but the process is complicated and fraught with unfamiliar lingo and surprise expenses.
If you’re ready to dive into the Boulder/Denver homes for sale market, take these five steps to prepare!
- Start saving now
It’s common to put 20% down, but many lenders now permit much less, and first-time home buyer programs allow as little as 3% down. But putting down less than 20% may mean higher costs and paying for private mortgage insurance, and even a small down payment can still be hefty. Play around with a down payment calculator to help you land on a goal amount.
- Know your credit score
When you’re taking out a mortgage loan, your credit will be one of the key factors in whether you’re approved, and will help determine the interest rate and loan terms. So check your credit before you begin the home buying process. Dispute errors that could be dragging down your credit score and look for opportunities to make improvement.
- Stop any new credit acitvity
Any time you open a new credit account, whether to take out an auto loan or get a new credit card, the lender runs a hard inquiry, which can temporarily ding your credit score. If you’re applying for a mortgage soon, avoid opening new credit accounts to keep your score from dipping.
- What can you afford
Before you start looking for your dream home, you need to know what’s within your price range. Use a home affordability calculator to determine how much you can safely afford to spend.
- Explore down payment options
Struggling to come up with enough money for a down payment? First-time home buyer programs are plentiful, including federal mortgage programs with Fannie Mae and Freddie Mac that allow loans with only 3% down, plus Federal Housing Administration loans and Veterans Affairs loans.