FIRST TIME HOME BUYERS
One of the most exciting times in my life was when I purchased my first home. Being a first time home buyer can be quite overwhelming. There are so many things to consider and the whole process - from establishing your credit - to moving in your new home will go so much smoother if you rely on an experienced real estate professional for guidance. The following information is to help you start your journey to owning your first home. Please feel free to contact me directly to discuss any questions you may have.
The first step in the home buying process is to establish good credit. The most basic way to get started will be to visit a local bank and deposit a small amount of money. You should then apply for a loan, using this money as security for the loan. Make payments for the first few months and then pay the entire loan off. Repeat the process with larger and larger amounts and finally you will progress to the point where you do not need to deposit money as security. At the same time, you should also be using credit cards responsibly and paying off the entire balance every month.
Along with establishing credit, a high credit score is one of the most important elements to the first time home buyer. High credit scores will allow you to get the lowest interest rates available on your home mortgage. Always pay your bills on time, keep your credit card balances at zero or at least very low and make more than the minimum monthly payments. For more information about improving credit, look in the "Financial" section on the "Home" page.
When buying your first home, you will need to save money for a down payment (a percentage of the cost of the home that you must pay when you go to settlement), earnest money (the deposit you make on the home when you submit your offer) and closing costs (the costs associated with processing the paperwork to buy a house). Now is the time to become disciplined to save a certain amount of money each and every week. This habit will not only be beneficial for purchasing your new home, but will give you security for the future as well. Creating a budget and knowing where your money is going will make it much easier to set a goal and help make sure you always live within your means.
The more money you can put into your down payment, the lower your mortgage payments will be. There are still a few 100% financing options available (VA loans, Rural Development, etc.), but right now FHA loans are requiring a 3.5% down payment and Conventional loans need a minimum of 5%. In addition to a lower monthly payment, one of the biggest advantages to putting at least 20% down is being exempt from paying an additional charge each month for mortgage insurance.
Most loans have 4 parts: the principal (the repayment of the amount you actually borrowed) - the interest (payment to the lender for the money you've borrowed) - homeowner's insurance (a monthly amount to insure the property against loss from fire, smoke, theft and other hazards required by most lenders) - and property taxes (the annual city/county taxes assessed on the property, divided by the number of mortgage payments you make in a year). Most loans are for either 30 or 15 years and there are many different kinds. With the interest rate seeing record lows, the fixed-rate mortgage offers the advantage of you always knowing exactly how much your mortgage payment will be. During the life of the loan, you will pay more interest than you will pay principal. The loans are structured so you will be paying mostly interest at the beginning of the loan and paying off the principal in the final years.