Securing your dream home doesn’t happen overnight.
Many first-time buyers are surprised by the amount of work it takes to purchase real estate. From the financial elements to the cutthroat market, becoming a homeowner isn’t child’s play (unless you’ve met a ton of kids with fixed-rate mortgages that we don’t know about).
Though it won’t be easy, buying your first home is a challenge worth taking on. To make sure you’re fully prepared for this adultingendeavor, read on for three tips every first-time homeowner should know!
#1 Check Your Credit
If you’re buying your first home, there’s a good chance you may not have much credit under your belt. Unfortunately, a solid credit score is a requirement for most home sellers and mortgage lenders.
Building credit can be done through different activities. Some of the most common ways to increase your credit score include:
- Managing your debt
- Responsible credit card usage
- Paying off loans on time (student loans, car payments, etc.)
If you want to prepare for buying your first home, you have to confront your credit score head-on (even if things get a little ugly).
Any score above 700 is considered exceptional, though some mortgage lenders will accept a wider range. Check your score for free online before you begin your real estate search!
#2 Make Your Mortgage Work for You
Not all loans are created equal. While a conventional mortgage will typically have high standards for credit scores and down payment percentages, other types of loans are more flexible.
Some common alternatives to a conventional mortgage include:
- FHA loan – A Federal Housing Administration (FHA) loan is backed by government funding. Low-to-moderate income buyers can qualify for this type of loan, which allows for a down payment as low as 3.5%.
- Jumbo loan – Standard jumbo loans will have similar qualifications to a conventional mortgage. Some lenders, however, may offer a jumbo loan with low down payment options to buyers with a minimum credit score of 660.
- VA loan – Active military members and protected veterans may be eligible for a VA loan. This type of mortgage has reasonable credit qualifications, lower interest rates, and usually no down payment whatsoever.
Your loan specialist can help you determine which type of loan you are most qualified for and will offer you the best terms. Keep in mind that once you’ve built up your credit and a good record of payment, you can always refinance your loan to help you lower your interest rate, and in turn, your monthly payment.
#3 Show Sellers You’re Serious
The real estate market can be competitive. Showing a seller that you’re serious can make or break your chance of getting a home over other buyers. When the time is right, use some of these tried-and-true tactics to ensure you’re at the top of the candidate list:
- Early offer – If you’re completely sold on a house, don’t wait around to make a deal. Get ahead of the game by proposing an offer as soon as you’re financially and emotionally committed to the property.
- Pre-approval letter – Some buyers will request a pre-approval letter from your lender. This document states that a bank has already accepted your request for a mortgage and showing it to a seller will increase your chances of being accepted.
- Substantial down payment – If you really want to blow your competition out of the water, just remember: money talks (as usual). Proposing a larger percentage than requested can really sweeten the deal.
You’re Almost There
Once you’ve got the hang of these tips, the hard work is just about done.
Your real estate finish line is on the horizon. Now all you have to do is find the perfect place and seal the deal. Remember that your dream home won’t pop up right away. When it does, though, you’ll be perfectly equipped to make it yours. Just remember to be fast, stay competitive, and don’t forget to check your credit score!