Jaci Hays, VP, Mortgage Lending Group
Buying your first home is an exciting milestone, but it can also be overwhelming given the complexities of the real estate market.
As a home purchase will likely be your largest financial transaction to date, it’s important to make the right decisions and to keep an eye on the details.
Whether you’re exploring mortgages, searching for the perfect property, or trying to understand the intricacies of purchasing a home, this guide provides essential tips to help first-time homebuyers (and provide a good refresh for those of you who’ve done this once or twice before) through the process.
Home Buying Tip 1: Understand Your Budget
Before you start looking at homes, it’s crucial to understand how much you can afford. Begin by reviewing your finances to establish a budget.
When calculating your budget, don’t forget to include your emergency fund. It’s smart to have a financial cushion that can cover at least three to six months of expenses. This will help you handle unexpected costs without jeopardizing your homeownership journey.
Consider your income, debts, and savings to determine how much you can realistically spend on a house. Tools like mortgage calculators can help estimate your monthly payments, taking into account interest rates and prepayments.
Not sure where to start? Check out our handy Mortgage Loan Calculator to give you a quick snapshot of what a monthly mortgage payment could look like.
Home Buying Tip 2: Get Pre-Qualified for a Mortgage
Securing mortgage pre-qualification is an essential step for first-time buyers. This process involves a lender evaluating your financial history to determine how much they are willing to lend you.
Pre-qualification not only helps in budgeting but also strengthens your position when making an offer, showing sellers that you are a serious buyer.
Home Buying Tip 3: Explore Different Neighborhoods
Finding the right neighborhood is as important as selecting the house itself. Consider factors like safety, schools, amenities, and proximity to work.
Grab the dog! A good way to experience a neighborhood you’re consider moving into is to take a walk through it. As you stroll take note of the positives and negatives to help you make a decision.
It would be a good idea to spend time in the areas you are considering, so you can get a feel for the community and whether it fits your lifestyle. Drive your potential new commute and keep an eye out for positive amenities (favorite restaurants, favorable school systems) or potential pitfalls (traffic congestion, overcrowded neighborhoods) along the way.
Home Buying Tip 4: Understand the Importance of a Good Real Estate Agent and Lender
Having a knowledgeable real estate agent, can be invaluable, especially for first-time buyers. They can provide insights into the housing market, help find properties that meet your criteria, and guide you through negotiations and closings. Choose an agent with experience in helping first-time buyers in your target area.
Equally as important is using a mortgage lender you can count on.
Homeownership is the dream for many across the Midwest, but not everyone has a team of lending experts right around the corner. Locally based, our underwriting happens close to home with teams that understand our area’s unique neighborhoods and needs – which may result in quicker average turnaround times for our customers.
Say so long to call centers! Additionally, at Waterford you enjoy a direct line of communication to your loan officer who will be ready to answer questions via phone, email, or text. Throughout the lending process, you can count on our lending team to provide regular loan updates and progress reports, so you always know the status of your loan.
Home Buying Tip 5: Conduct Thorough Inspections
Once you’ve found a home you’re interested in, it’s vital to conduct a thorough inspection. Don’t let the excitement of the “perfect” place make you overlook factors that could make or break the purchase of that home.
For instance, that fresh quote of paint in every room may look great – but it could be hiding watermarks or wood rot!
Beyond the standard inspection, consider getting specialized inspections for pests, mold, or radon, especially if the home is in an area prone to these issues. These inspections can uncover hidden problems that might not be immediately visible but could impact your health and finances in the long run.
Hire a professional inspector to check for any issues that could cause costly repairs in the future, such as structural damages or outdated electrical systems. This step can save you from unexpected expenses after you’ve already closed on the house.
Home Buying Tip 6: Be Prepared for Closing Costs
Many first-time buyers are surprised by the closing costs associated with purchasing a home. These can include fees for loan origination, home inspections, title searches, and other expenses to finalize a mortgage.
Once you’ve left the closing table, make sure to keep all your closing documents in a safe place. These include your mortgage note, deed, and settlement statement, as they contain important information about your loan terms and property ownership
Typically, closing costs range from 2% to 6% of the purchase price. That means, on a $250,000 home loan, you would pay from $5,000 to $15,000 in closing costs in addition to the down payment. Factor these into your budget when considering how much you can afford.
Home Buying Tip 7: Take Advantage of First-Time Buyer Programs
Look into state and federal programs available for first-time buyers. These programs often offer perks like down payment assistance, favorable mortgage terms, or tax credits. For instance, an FHA, VA, or USDA Loan (all available at Waterford) offer low to no down payment options to first-time and experienced buyers. Each program has its eligibility requirements, so be sure to research which options might be available to you. You can learn more about types of mortgage loans here.
Purchasing your first home is a significant commitment and investment, but by following these essential tips, you can make the process smoother and more manageable.
With careful planning, the right team, and a clear understanding of the market, you’ll be better prepared to make informed decisions and find your perfect first home.
Ready to take the next step? Whether you’re looking for a pre-qualification or want to apply for a mortgage, our online application process is conveniently designed to allow you to stop any time and pick up where you left off. Remember, if you have any questions you’re welcome to contact our expert team today for guidance tailored to your unique situation.
About the Author
Jaci Hays is the VP of Mortgage Lending at Waterford Bank, N.A. in Toledo, Ohio. She has been helping clients with a variety of mortgage loans for over 30 years specializing in great customer service, clear communications and a vast knowledge of mortgage lending.
Known for supporting her clients from their first call to past the closing table, Jaci’s goal is to make your mortgage experience as simple and stress free as possible. If you’re looking to buy a new home, refinance a mortgage, or finance a new home build, connect with Jaci today.
