Ready to Buy a Home for the First Time? Here’s What You Need to Know as You Get Started
Buying a home for the first time is exciting and overwhelming. It’s usually one of the biggest purchases people make in their lives, and it’s unlike buying anything else. If you know what’s involved, you’ll be ready to take on the process like a pro, and you can avoid some of the more common mistakes that drain first-time homebuyers’ money and time.
Is Now the Right Time to Buy a Home?
Answer this question before you start putting time into checking out listings. And as you do, make sure you think about these key factors:
- Your credit: What’s your credit score? What type of debt are you currently carrying? And what type of loans would you be eligible for or denied, based on your credit score? If you have poor credit, the options for mortgage loans can be very limited and more expensive (i.e., come with higher interest rates). It’s usually better to start shopping for a home with average to decent credit so that you have more—and more affordable—options for mortgage loans.
- The down payment: How much can you afford to put down on the house? If you have little to nothing saved up for a down payment, again, you may not have very many options for a mortgage. So, it’s generally best to wait and work on saving up a down payment before you start shopping for a house.
- The market: What’s the current housing inventory like? Is it a buyer’s or seller’s market? Even if you have great credit and a down payment saved, it’s smart to consider the market and who has any advantage at the moment before you dive in. Sometimes, even waiting just a few months can make a drastic difference in inventory, prices, and the overall housing market.
4 Steps to Take Before You Start Shopping for a New Home
If now is the right time to buy a home, it’s smart to take the following four steps before you start looking at houses. If you do, you’ll be a much more appealing buyer to sellers, and you can save time while possibly expediting the purchase process.
1. Get your paperwork together.
You’re going to need several documents to get a mortgage and, ultimately, buy a house. This can include (and may not be limited to) paperwork like or showing:
- Paystubs or income statements
- Proof of employment and employer’s contact info
- W2s, ideally two years of tax records
- Proof of additional income and/or assets
- Debt statements, like credit card bills or vehicle loan documents
- Down payment gift letters
- Court orders from a divorce or custody case (if or when monthly payments have been ordered)
- Bankruptcy and/or foreclosure records
Keep everything in a safe, secure location that you can readily access going forward. This can facilitate the preapproval and streamline the process of taking out the mortgage when you do find the home you want to buy.
2. Shop around for a mortgage.
Lenders offer different deals and rates, so check out at least a few options to give yourself better chances of finding the best mortgage loan. Also, be sure to consider alternatives to traditional lenders and mortgages, like VA loans, FHA mortgages, and loans from credit unions.
3. Get a preapproval.
Buyers who have preapproval letters in hand are always taken more seriously than those who don’t. While that can help buyers stand out in a seller’s market, preapprovals can also mean you don’t have to jump through as many hoops later when you’re ready to get the loan and buy a house.
4. Set your budget.
How much can you really afford to spend on a house? What type of mortgage payments can you realistically keep up with? Just because you’re pre-approved for some amount doesn’t mean that you should look for houses at that price.
Also, as you consider your budget, think about closing costs and moving costs, as well as homeowner’s insurance and house maintenance costs. The down payment and mortgage are just the beginning of what it costs to own a home, and you want your budget to reflect that and give you room to keep the house insured and in good condition in the future.
Buying or Selling a Home in Texas? We Can Help!
If you want to buy or sell your home in Texas, you can get experienced help and cash back at closing when you work with the 5-star Realtors® at New Home Gurus. We can guide, advise, and support you through the process, helping you with offers, negotiations, and closing. Then, we’ll split our commission with you at closing.
Homebuyers and sellers who work with New Home Gurus can get back an average of $4,500 to $12,000 at closing.
How Much Cash Can You Get after Closing?
We are standing by, ready to answer your questions and explain the details of our commission-sharing program.