Jan 6 2017 27592 1

Jan 6 2017 27592 1

5 First Steps to Buying Your First Home

Don’t start searching for your dream house without taking these important steps first. For first-time home buyers, finding and purchasing the right house can be a very long, complicated process. It is completely normal to feel overwhelmed when you’re trying to juggle finding the perfect neighborhood, getting the price you can afford, shopping for a loan, figuring out which school districts are the best … and so much more. But searching for your dream house doesn’t have to turn into a nightmare! Your professional realtor and lendor can walk you through the various stages of purchasing a home, from house hunting to closing, so you can venture out into the world of real estate with confidence!

You might be thinking, “Where on earth do I start?” The truth is the home-buying process begins long before you look at any listings. First, you’ll have to take a little bit of time to investigate your credit score, figure out your budget and organize your paperwork. It will save you a great deal of time and frustration in the long run. Here are the first steps you need to take in order to prepare yourself for your search:

Step 1: Shape up your credit.
Your credit score dictates what kind of mortgage loan rate you’ll receive. The higher your credit score is, the lower your monthly payments will be. If your score is below 640, you’ll have to either pay a higher monthly mortgage or shell out a larger down payment. So in order to save money, you need to make sure your score is in top form before you start applying for loans.

If you don’t know what your credit score is, your first plan of action should be to find out where you stand. You are entitled to one free credit report from each of the three credit bureaus (Equifax, Experian and TransUnion) every year. To get your free annual reports, go to www.annualcreditreport.com.

Review each report closely, keeping a keen eye out for errors. It’s possible that you might find some mistakes, like erroneous late fees or account information that isn’t yours. Spotting these inaccuracies early on gives you the opportunity to contact the creditor and request a correction, getting your credit score where it needs to be.

Does your credit score need a boost? Closing your current credit card accounts won’t help. Getting rid of accounts may actually hurt your score since you are reducing the amount of credit that is available to you. You’ll also want to avoid applying for new credit cards a year before you plan on buying a home. Lenders want to see that you are a dependable borrower and have a healthy mix of credit in your name. Paying off your outstanding balances and keeping your expenses low and steady will do a much better job of improving your borrowing power.

Step 2: Get your paperwork ready.
Talk with a lender and ask to be Pre-APPROVED (not pre qualified), this will make your house shopping and placing an offer much easier. The lender will need to see a few important documents in order to complete your loan application. It’s a good idea to have this paperwork on hand prior to talking with a lender. Here’s a quick checklist of the records you’ll need to prepare. Make sure you have the most recent copies of each of the following from the last two years:

  • Tax returns

  • W-2 income statements

  • Pay stubs

  • Credit card statements Bank and investment account statements

  • Divorce and child support documents

Step 3: Create a budget.
Pulling your paperwork together will not only prepare you for your appointment with the lender, but also help you draft a budget. Taking a close look at your financial documents gives you a clear picture of how much you can realistically afford to pay for your down payment, monthly mortgage, interest, property taxes and insurance.

Keep in mind that when a lender tells you how much of a loan you qualify for, it doesn’t necessarily mean it’s within your financial means. It’s important to know the boundaries of your budget so you don’t overextend yourself and buy a home you can’t afford. A good rule of thumb: The monthly cost for your home shouldn’t exceed 28 percent of your gross monthly income. This link to a mortgage calculator http://exitrealtyflorida.com/mortgage-calculator/  can assist you in gauging how much you can afford, what your monthly payments will be for a home, and more. Once you have a budget outline, keep it handy until it’s time to meet with a lender.

Step 4: Start saving.
If you haven’t already, you’ll need to start saving as much money as you can for the down payment, which generally ranges from 3% to 20% of the home’s price.

Home buyers also typically have to pay cash for closing costs up front. These can range anywhere from $2,000 to $4,000 for a $200,000 home, depending on location. This is another expense you might have to save up for, but check with your lender they may have access to a variety of affordable mortgage programs, one of which may be a No Closing Costs Mortgage.

Make sure you also set aside at least a few months’ worth of mortgage payments; it’ll show your lender that you won’t just be living paycheck-to-paycheck after you purchase your home. Plus, you’ll need that extra cushion in case the house needs any repairs or new furniture after you’ve moved in.

Step 5: Make a (realistic) wish list.
Think about what you want from your home and why you’re buying it. It’s rare to find a home that has everything you want, but it’s essential that the home you eventually decide on meets most of your current and future needs—while staying within your budget. For example, if you’re planning on having a family in the near future and living in your home long-term, you’ll want to look for a house that you can grow into. Selling a home you’ve quickly outgrown can be a slow and expensive process. On the flipside, you also don’t want to make an extravagant wish list that’s difficult or impossible to achieve at your price point. Deffinately do some online research, but be sure to rely on a professional realtor to make your search much easier. They can help you to see what the average prices of homes are in your desired area and what you can get for your money. This way, you’ll piece together a sensible wish list you can share with your realtor for the best options for you

Once these steps are taken care of, you’ll be more than ready for the fun part: Seeing Houses!



Victor DeFrisco Headshot
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Phone: 561-951-3759
Dated: January 6th 2017
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