If you’re starting to consider homeownership, you probably have lots of questions and concerns. As complex as buying a first home may seem, it’s a pretty straightforward process. If you take it step by step, you’ll purchase your first house in no time. Ready to learn how? Let’s get started!
Prepare Your Down Payment
A down payment is the money you pay upfront to purchase your home. This payment goes toward your mortgage and is usually around 10%-20% of the selling price for the home. The greater the down payment you put down, the less you have to pay in interest rates and added fees.
As a first time home buyer washington, know that most people aim to put down around 10%, but some put down 5% or less, especially for specific kinds of mortgages. Your ability to provide a solid down payment can influence the kinds of homes and mortgages you qualify for.
If you can’t come up with a down payment on your own, you might qualify for government programs that require lower payments for homes sold under market prices. You might not have to provide a down payment if you acquire VA or USDA loans.
Fix Your Credit Score
Bad credit can seriously interfere with your ability to purchase a home. Aside from having a down payment, you’ll need good credit to prove to your mortgage lender, home seller, and other associated parties that you are responsible with your money, have the income needed to pay for the home, and can pay off your debt consistently. Your lender will rely primarily on your credit score to decide how likely it is you will come through on your monthly payments.
If your credit is poor, you might get a loan with a significant interest rate, but you might not be eligible. If you have credit card debt or other outstanding debt, your chances of getting a good loan significantly decrease. Fix your credit well before you start looking at homes. This way, you won’t have financial limitations holding you back.
Determine What You Can Afford
After you’ve saved up and paid back any debt, go online and calculate how much money you can afford in a monthly mortgage solution. You can determine your minimum to maximum affordability, which can help you know what to look out for in the future. You can also get pre-approved to determine how much you can truly afford in a home loan and whether you can really buy a home.
By working with a lender, you’ll determine the price range of homes you’re working with and the prices outside your financial reach. Although the homebuyer sentiment is not overly positive, an official pre-approval process can give you clarity on the likelihood of home ownership for you.
Pre-approval can give you guaranteed information about how much you can afford rather than just a rough estimate. This way, you’ll avoid wasting time looking at places and mortgage plans that won’t work for you.
Get An Agent
Once your finances are squared away, get a real estate agent on board to help you with the shopping process, establishing offers, home inspections, appraisals, and more.
From there, determine the closing costs and make your new home official! Your lender should also be involved in these later stages of the process to ensure everything is in order.
Get Closer To Buying Your Home
Although there is certainly a lot involved in purchasing a home for the first time, you can get there, step by step. Follow the general guidelines above and be closer to buying your first home!