Tips for First-Time HomebuyersPosted on Jun 29, 2020
Buying a home can be a nerve-racking experience, especially when you're doing it for the first time. But don’t worry; we’ve compiled some tips to help you navigate the process, save money, and avoid common mistakes!
Potential Hurdle: The Down Payment
Tip 1. Start saving early
Although it used to be commonplace to put 20% down, many lenders now permit much less. First-time homebuyer programs allow as little as 3% down.
Start setting aside tax refunds and bonuses, setting up an automatic savings plan, or using an app to track your progress (or all of the above!) These small changes will help get you closer to your savings goals.
Tip 2. Explore Your Options
If you’re struggling to come up with a sizable down payment, some of these loan options might work for you:
Conforming to standards set by the government-sponsored entities Fannie Mae and Freddie Mac, these loans require down payments as little as 3%.
Insured by the Federal Housing Administration, these loans permit down payments as low as 3.5%.
Guaranteed by the Department of Veterans Affairs, VA loans often require no down payment at all.
Of course, if you are able to come up with a higher down payment, it will likely mean having a lower monthly mortgage payment.
A 30-year fixed mortgage is likely to net you the smallest monthly payment, but if larger payments are in your budget, you can get a lower interest rate with a 15-year or 20-year fixed loan. Questions about which loan is right for you? Give our residential lending team a call and they can walk you through the options you qualify for!
Potential Hurdle: Applying for a Mortgage
Tip 3. Check Your Credit and Pause New Activity
Your credit is one of the deciding factors in whether you’re approved for a mortgage. It also determines your interest rate, and possibly your loan terms.
So, it goes without saying that you should check your credit before beginning your home-buying journey. Dispute errors dragging down your score and look for opportunities to improve, such as paying down outstanding debts.
Also, it’s best to avoid opening any new accounts, like credit cards or auto loans, until your home loan closes.
Tip 4. Get Pre-Approved
As you get closer to buying a home, it’s smart to get a preapproval. This is where the lender thoroughly examines your finances and confirms in writing how much it's willing to lend you, and under what terms. Having a preapproval letter also solidifies your stance as a serious buyer, and can give you a leg up over buyers who haven’t taken this step. Tim Moore, our resident residential lender, can help you take this crucial financial first-step!
Potential Hurdle: House Shopping
Tip 5. Hire the Right Agent
You’ll be working closely with your agent, so it’s essential that you find someone you click with. The right buyer's agent should be highly skilled, motivated, and knowledgeable about the area. Here at Team Lassen, we’ve been serving first-time home buyers in the Denver area for more than 4 decades! We’re happy to help you find not only the perfect neighborhood, but the perfect home that keeps you within your wants and budget!