First Time Home Buyer? Shop Around
Just because you are a first time home buyer doesn't mean you can't be choosy. When you are looking for your first home, make a list of the criteria of utmost importance and do your best to stick to it. You may be tempted to offer on the first home or condo you see but you should avoid that impulse and continue looking around to make sure you've found the right place for you.
First time home buying is stressful but if you prepare yourself with a good mortgage, a good real estate agent and a list of what is important to you and on what you are willing to compromise, you'll find a starter dream home that really fits the bill.
Getting Your First Home Mortgage
If you are ready to start your first time home buying process, make sure you educate yourself on your options and don't just depend on the advice of others. For instance, first time home buyers are often entitled to special government funded mortgage programs that have low interest rates and low down payments. If you arm yourself with knowledge, you can explore all the options you have.
If you want more instant gratification, online mortgage brokers are for you. These folks specialize in fast turnaround time with mortgage options and closings.
It is recommended that you get a mortgage pre-approval before you go house hunting. Many sellers today demand a pre-approval letter before they will accept your offer. Pre-approval also gives a first time homebuyer a realistic idea of what they can afford to buy.
First Time Home Loans Are Easy to Find
You may still be renting because you think you can't get a mortgage as a first time home buyer. This is often not the case, so you should really find a mortgage broker online or locally to consult with. The best thing about mortgage brokers is that they will coach you on what you need to do to get into a better position if you need to.
Additionally, they will work harder to find you better programs if you prove your loyalty to them. When you talk to your mortgage broker you need to ask what kinds of programs you qualify for. They will get your credit score and analyze your financial data to assess what you can get and what you can afford.
Take this information to your real estate agent and begin your search only looking at the properties you can really afford.
Low Down Payments with a First Time Home Buyer Program
Are you worried about coming up with a down payment as a first time homebuyer? There are many programs out there that are specifically designed to help with this very concern. Several programs require little or no money down.
Did you know the federal government even allows for a one time withdrawal, up to $10,000, from an IRA or retirement account with no penalty for first time home buying?
It's hard to decide between the various mortgage programs out there, which is why you need to develop a relationship with your mortgage broker. They can help you find the right first time homebuyer program for you and explain all of your options thoroughly.
Making the Most of Your First Time Home Buying Experience
Make the most of your first time home buying experience by enjoying it and learning from it. Take the time to learn about your neighborhood. Find out about schools, about average home values, about the increase in those home values over the last five years. Assess crime rates and try to find out if anything significant is happening in terms of home or town development that will increase your home's value into the future. Take the time to learn about mortgage programs. Learn about your options as a first time homebuyer and arm yourself with information for the future. Finally, take this time to develop relationships with mortgage brokers and real estate agents. By establishing these relationships as a first time home buyer, you'll be able to navigate that much more easily through any future home buying.
3 Reasons to Use a Real Estate Agent as a First Time Home Buyer
Why should you use a real estate agent as a first time home buyer? They have the professional knowledge and experience to find you the home you've always dreamed of. Don't end up settling for a home you don't hate. Here are some basic reasons why using a real estate agent as a first time home buyer is a good idea:
- Negotiation Skills - Great real estate agents know how to negotiate. They represent their clients in negotiation the home price, anything that needs to be addressed after the home inspection, closing details and the like. They have an impact on every aspect of your home buying process and using a real estate agent can mean saving thousands of dollars.
- Experience. Looking for a home and getting through the closing process the first time can be incredible intimidating. Real estate agents have the experience to guide you through this process and they have the knowledge of neighborhoods, homes or condos on the market and properties coming on the market that you should absolutely tap into.
- Resources. Finding a home inspector, a closing attorney or agent, a seller's attorney, an appraiser, a mortgage broker can all be arduous and painful. Your real estate agent will have contacts in all of these areas. You may find better mortgage rates online, but it doesn't hurt to explore all of your options and tap your real estate agent's network.
Look For Flexibility in First Time Home Loans
What do you need to look for in a mortgage program as a first time home buyer? Here are a couple of tips and guidelines:
- Flexibility - Make sure you get a program that offers a monthly payment you can really afford. Be honest with your mortgage broker if your payment seems out of reach. They may be able to suggest a three or five year ARM mortgage with a lower interest rate and lower payments or an interest only loan to get you into your home without giant mortgage payments.
- Building Better Credit - If your credit isn't perfect, your mortgage broker can probably find you a program that will help you build you credit up. The payments may be flexible and as you make more payments on time, your interest rate may even drop!
- Long Term Goal - Are you planning on staying in this home forever, for three years, for five years? Communicate your goals to your lender because in situations like these they may have several mortgage options from which you can choose.
Refinancing Your First Home Mortgage
As a first time home buyer you can't always get the best rate. Maybe you didn't have twenty percent to put down or maybe your credit needed a little rebuilding. If you've been in the house for a few years now and you've built up some equity, it may be time to refinance and get a better rate.
Refinancing your first home mortgage is very easy and painless, especially if you use your regular mortgage broker. The process still requires and application, a home appraisal and some of the same financial documents you needed to provide for your first time home buying, but the processing and closing should be faster and this time there is no seller involved to slow the process.
Speak with your mortgage broker about first home mortgage refinancing options. You'll probably save some money and maybe you can pull out some equity and fix that master bathroom!
Interest Only - A Popular First Time Home Buyer Program
Interest only mortgages are gaining popularity with first time home buyers. The reason for this is that interest only mortgages offer great flexibility in terms of payments for the first several years of the loan.
When you pay for your interest only loan, you are actually only making payments on the interest of your loan, so the payment is substantially lower. You can make payments towards the principle if you can, but you aren't required to.
Be careful if you choose an interest only loan. Don't get into more house than you can realistically afford. Make sure you understand the loan schedule so you aren't caught unawares when you have to begin paying towards the principle as well.
Getting It Right the First Time Home Buying
Don't be tempted into excess when first time home buying. A real estate agent may show you a condo or home that is really more than you can afford and you need to be strong and stay within your budget. Here are a few tips on making sure you buy a home you can really afford to live in:
- How do you know what can you really afford? Work backwards. Look at what you are paying in rent. Can you afford to pay more? Do you need to pay less? Consider that a mortgage payment will also include taxes, then assess the monthly payment from there.
- Where do you want to live? You may not get exactly what you want as a first time home buyer, but you should be armed with knowledge about neighborhoods, school districts or any other factors that are important to you.
- Don't get in over your head. Don't get a mortgage that is too large, has a high interest rate or that has a prepayment penalty if you can avoid it. Bad mortgages can make life much more complicated. Make sure you are using a reputable mortgage broker and you should be safe.
