How To Be Financially Ready To Buy Your First Home

If you believe you are coming close to the time to buy your first home, you’ll want to be informed. It’s never too early to begin preparing for a home purchase. The more organized you are, and the better you have your financial situation in order the better off you’ll be when it comes to the home search. Where should you start? Below, you’ll find some key things that you can do to maximize your chances of finding and securing your first home.

Check Your Credit


Your credit score is one of the most critical pieces of your financial picture. A FICO score ranges from 300 to 850. The higher the number, the better off you are. When you’re getting a mortgage, you want to have good credit. If your credit score is above 740, you’ll be eligible for the best interest rates. If your credit score needs help, a higher score will get you the best interest rates available. Once you get your credit score, (It’s free to get through a variety of services.) aim to improve your score. Pay your bills on time. Use less of your available credit (target to use 30 percent or less of your total available credit.) The bottom line is that a low-interest rate will save you a significant amount of money over the life of your loan. 

Refrain From Opening New Accounts

If you’re in the market to buy a home, it’s probably best for you to stay away from opening new accounts. Every store has their credit card and offers deals to open an account in store. While it could save you some money on your purchase, opening new accounts has a negative impact on your credit score in the short term. A car loan, for example, will also affect your credit score because it brings your debt-to-income ratio up, which can put a damper on your chances of getting a mortgage for a low-interest rate.

Save, Save, Save

If you want to buy a home soon, you’ll need to save up a significant amount of money. These savings will go towards a downpayment, closing costs, and furnishing your new place. Every chance you get, you should be putting money away. Include gifts, bonuses, and any other income that’s outside of your average take-home pay. 

It’s also a good idea to set up a second bank account dedicated to saving for the home. Set up an automatic transfer each month that will go into that account from your primary earnings. You can d this based on how your employer pays you.

Look For A Real Estate Agent

Your real estate agent will be a crucial part of your home search. They will help in everything from finding the property of your dreams to negotiating the deal to sitting by your side at closing. You should do a bit of research to help you find a real estate agent who can assist you in finding the right property for you. 

Ask family and friends for recommendations of agents. You can search for the real estate agent’s name online and see what kind of reviews the agent has and contact different agents. From there. You can make a decision.          

Now, good luck with your home search! 

The Getting Started Manual For First Time Home Buyers

Are you thinking about buying your first home but completely overwhelmed with where to even begin?

Buying your first home is a big, and exciting, decision. It’s also one that comes with a big learning curve you need to get down quickly.

There are many steps to the process and even though your agent is always here to help you and give advice it’s critical you do your own research. You want to be able to take action quickly when you find your dream home. To do this you will need to be able to keep up with the process by having everything done neatly, orderly and on time.

So where to start?

Start here:

Start by sitting down with your budget. What do your current finances look like? What sort of wiggle room for spending do you have? What can you afford for a monthly mortgage payment?

And perhaps more importantly, do you have enough saved to cover a down payment and closing costs? Depending on which programs you qualify for you don’t necessarily have to put the traditional 20% down. With that said, you should know how much you would need to put down and if you have money in the bank to cover those costs.

Smooth out any credit snags. Your credit score doesn’t need to be out of this world, but it should reflect that you are actively improving and financially responsible.

Find a mortgage professional you trust to help you make the right moves throughout the process. Again, you want to be able to take action quickly once you find a home you love. And you don’t want to miss out because your mortgage professional hasn’t prioritized you.

You will also want to have a preapproval prepared, with the help of your mortgage professional, when you are ready to start looking at houses. Having a pre-approval in hand shows your agent that you are serious about this process.

Calculate the costs. Yes, more math! You will want to take into consideration real estate taxes, HOA fees, home repairs and maintenance as you refine your budget to see which homes make the most sense for your lifestyle.

When looking at homes focus on the “bones” of the house. Look past paint, hideous wallpaper and yes even the granite countertops. Are there enough bedrooms? Bathrooms? A laundry room? Is there enough garage space and driveway? Do you like the floor plan? The neighborhood?

Know what’s important to you. In an ideal world, you will find a home that ticks off every item on your wishlist. And not to say that it’s entirely impossible, but know which items on your list are negotiable. Which are you willing to budge on and which are make or break?

What Is A Home Warranty?

You may have heard about home warranties, but are unsure of what they are. A home warranty is an excellent addition to your home insurance and has a particular function. When you buy a home, the last thing you want to worry about is things breaking or malfunctioning in the house after you buy it. Buyers fear the expenses they may incur if items in the home start to break down shortly after the property becomes theirs. As a first-time homebuyer, a home warranty can be incredibly helpful since you may need a crash course on home maintenance. 

Depending on what’s the norm for homebuyers locally, either the buyer or the seller will pay for the home warranty. Some sellers pay for warranties up front as an extra assurance to the buyer of the property they’re about to purchase. Sellers also use this as an excellent tactic to “wash their hands” of the property. The buyer won’t need to contact the seller if something goes wrong with the property. A home warranty is a fairly inexpensive way to show buyers that appliances and the home itself have been well taken care of. Occasionally, real estate agents will give buyers a home warranty as a gift for their business. Usually, this is done for higher-end homes. 

Home warranties aren’t very expensive. They usually range in price around a few hundred dollars in cost. The cost is based on a yearly rate and can be renewed each year at a slightly higher premium. 

How Do The Warranties Work?

The warranty provider works with specific companies for different purposes. When the homeowner calls the warranty provider to let them know there’s a problem, the service provider will call the homeowner to make arrangements to fix the problem. If an appliance cannot be repaired, the warranty company may replace the item. There are usually small service fees associated with these repairs and replacements.

Is Anything Not Covered?

A home warranty will not cover numerous items around the house. These items include:

Outdoor fixtures and plumbing

Indoor plumbing fixtures

Pools

Hot tubs

Some appliances may not be covered

Heating system

Water heaters

Cooling system

Fans

Home warranty plans can vary based on your location and the type of policy. Make sure you review what’s covered before you finalize any home warranty. It’s an individual choice that homeowners make to have a peace of mind when moving into a new place.  

Save Money on Your First Home

Buying a house puts valuable equity within your reach. It gives you the authority to decorate, structure and design a property to your liking. Little beats the freedom and power that you will feel after you pay your house off and become the sole owner of a unique property that may be valued at several hundred thousand dollars or more. But, getting approved for a mortgage doesn’t just happen.

Proactive steps to first time homeowner savings

The best time to start saving money on your first home is before you start home shopping. If you immediately thought about your credit rating and the importance of going into the home buying process with a strong credit rating, you’re on the right track. Keep reading, to learn practical steps that you could take to improve your credit rating.

Also know that there are other important steps to take to save money on your first home. These steps will also help you to save even if you’re not a first time homeowner. Top of these steps is financing. Getting pre-approved for a home loan from a reputable lender can give you valuable price leverage.

Pre-approval for a home loan alerts your realtor to how much mortgage you can afford to take on. To save on a house, avoid shopping for houses that are priced at the maximum of your home loan approval rate. See pre-approval when interest rates are low. Items that you need for pre-approval include pay stubs, income tax returns, current loan amounts and your credit score.

More ways to save money on your first home

Shopping for a home loan with your local bank could net you lower mortgage interest rates. This can be particularly helpful if your income is directly deposited into your account and if you have several thousand dollars of savings in your bank account. If you know that you want to buy a house a year from now, start working on your credit score now. Also, start building your bank account savings.

Another way to save money on your first home is to work with a real estate agent who takes a good credit score seriously, a realtor who won’t tempt you to take on more house than you can afford right now.

To improve your credit rating, pay down high interest loans. Also, pay down or, better yet, pay off high interest credit cards. If you have accounts in default, also pay these off or, at the least, pay the accounts up so that they are current.

Take charge of the home loan process

Millions of Americans apply for a home mortgage each year. Not everyone is approved. This is a time when being proactive can help you fulfill a dream. Paying off debts and getting caught up in late payments help to improve your credit which, in turn, improves your chances of securing a home mortgage. Getting an okay from a lender is another huge step forward.

Connecting with a mortgage lender before you start home shopping not only gives you money to work with, it is a great way to know what areas you need to work on to increase the amount of money that a lender will loan you. Additionally, if you aren’t pre-approved for a home loan, you can find out why you weren’t approved and take steps to correct these weak spots.