4 Proven Useful & Practical Tips For Financing Your First Home
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by Jamohl DeWald
- July 24, 2018
- Buying Real Estate
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4 Outstanding Quality Tips For Financing Your First Home
Are you thinking about buying a home this year? Are you slightly overwhelmed by the whole process? Are you not sure where to start and who to speak to? No worries, you are not alone! In this article, I will share with you a few things to consider and make the path to homeownership an easier one when you decide that you are ready to buy a home.
It’s a good idea to fully understand the home loan process. If you’re thinking about buying a home this year, use these 4 tips to optimize your opportunity.
Credit-Check
Do you know what your credit score is? Do you have any credit? Do you have battered credit? This is step number one in the pre-approval process. It’s a good idea to pull a copy of your credit report and look it over for any errors or inaccuracies. This is the time to start working on fixing those inaccuracies that you find. It would also be a good time to speak to a credit repair expert or your local mortgage broker for advice. They can advise you which outstanding debts to tackle first and what type of account you should open to help build credit if you don’t have any/enough.
Your credit score will have a direct impact on your mortgage loan rate and what types of loans you can qualify for. If you have been procrastinating and thinking your battered credit will just go away on it’s own, it’s time to change that mindset and deal with it head on!
Save-Down Payment
While experts may advise putting 20% of the total sales price down, in today’s world the average first time home buyer puts down about 3 to 5%. 20% down is just not possible for most when it comes to their first home purchase. There are programs out there that don’t require any money down or as little as 3-5% down depending on your credit and where you plan to buy a home (Check with your local lender or mortgage broker for loan options available to you in your area) There are all types of down payment assistant programs out there from grants, to non-profit organizations that can help you as well.
More than likely, there will be expenses beyond just your down payment. These can include, closing costs, mortgage insurance (if less than 20% is put down), homeowners insurance, flood insurance , negotiated repairs needed to the home, and let’s not forget the move itself! It is in your best interest to save as much money as possible before you start the pre-approval process. When you have a few months of mortage payments saved it can lead to more flexibility from the lenders.
Pre Approval
Now that you have gotten your credit cleaned up and all inaccuracies removed, saved up some money for closing costs and down payment, it is time to get your home loan pre-approval done. With inventory at an all time low in most areas of the United States, it is also still a seller’s market in most areas. You must have a pre-approval in hand, not a pre-qualification when you decide to offer on a home in today’s market. A pre-qualification is just that…that means you have spoken to a lender and told them how much you make etc, whereas a pre-approval means that a lender has verified the things that you have said on the phone and have documentation to back it up. A pre-approval is much stronger than a pre-qualification. A pre-qualification is barely worth the paper it’s written on.
Ultimately getting pre-approved for a home loan will save you and your realtor time because you will know exactly what you can afford. It also shows the home seller that you are serious and that you have done the work needed in order to be able to perform on your end of the loan.
The Offer-Agent
This part of the transaction can be overwhelming and stressful. You don’t want to offer too high and over pay for the home but you also don’t want to offer too low and not have your offer considered.
You can do your own research online to get an idea of the market activity around the home you want to offer on. How quickly do homes sell in that area, do most homes end up closing over the ask price? Are there a lot of homes available around this one and similar, is there no inventory around it? These are all things that an experienced realtor will be able to advise you on and help you figure out a fair offer price that will give you the best chance of getting your offer accepted.
Buying a home can be a stressful process whether it’s your first home or third. Between, the loan process, homes search process, offer, inspections, negotiations, appraisal there are a lot of things that can go wrong! But if you take advantage of these 4 tips, they can definitely help you on the path to homeownership. Check this article called “First Time Home Buyer & How to Prepare to be a Homeowner” for more first time home buyer help.
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About the author:
Our philosophy is simple: clients come first. we pledge to be in constant communication with my clients, keeping them fully informed throughout the entire buying or selling process. If you’re not left with an amazing experience, we haven’t done our job. Success is not measured through achievements or awards but through the satisfaction and repeat/referral business of our clients. Our goal is to be your top realtor choice when it comes to buying or selling real estate. Having spent most of our lives in Portland, OR., living in Northeast, Southeast, Bethany, Hillsboro, Beaverton, downtown, St. Johns, Clackamas and West Linn, we're very knowledgeable of the many different neighborhoods our city has to offer.
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