5 Tips for First Time Homebuyers

5 Tips for First Time Homebuyers

Are you a first-time homebuyer trying to navigate the housing market?

For a first-time homebuyer, the housing market can seem overwhelming and complicated. Not only is buying a house most likely the largest purchase you will make but the process can be filled with unfamiliar phrases and processes you might not understand.  

To make this time less stressful, here are some top tips for new homebuyers to confidently attack the housing market! 

Tip 1: Closing Costs Aren’t Just Lender Fees 

When it comes to closing costs there is more than meets the eye. According to Clark Jarstfer, Branch Manager at GVC Mortgage Perrysburg, “a common misconception is that closing costs are all lender fees and it’s quite the contrary.” The lender fees typically account for just 25-30% of the closing costs.   

So, if there are other costs besides lender fees, what exactly goes into the closing costs?   

You must account for other third-party fees that include but are not limited to home appraisal fees and title company fees. There are also “prepaid expenses (such as prepaying your homeowner’s insurance for 12 months in advance) and escrow deposits to make sure you have enough money in your escrow account so when property tax bills and homeowner’s insurance are due, they can be paid directly out of your escrow account.” 

Tip 2: Hold Off on Large Purchases 

Have you started shopping for appliances or furniture for your new house? Hold your horses! It can be pretty tempting to buy these large ticket items for your new home but wait until after you’ve closed. GVC Mortgage Consultant, Christine Jenkins reminds buyers “we monitor their credit inquiries during the entire process up until closing.”  

It is important not to complicate the homebuying process, so avoid making any large purchases or taking out new lines of credit until after you have closed on your new home. 

Tip 3: Make Sure You Are Ready 

Deciding to become a first-time homebuyer can be a very exciting transition that is a large financial commitment. Make sure you have considered the following:  

  • Do you have enough savings to make a decent down payment, pay closing costs, and have at least 2-3 months’ worth of mortgage payments?  
  • Do you have the time to commit to upkeeping both the lawn and home maintenance? 
  • Will you be staying in the area for a while? 
  • Do you know your credit score? 

Tip 4: Get Pre-Approved 

As you are getting closer to buying a home and starting the house hunting process, it’s smart to get a pre-approval letter. Being pre-approved means a lender examines your finances and confirms an estimate for how much they are willing to lend to you. Having a pre-approval letter makes sellers take you more seriously which can give you an upper hand over other potential buyers.  

Once you have received your pre-approval letter, it is important you look at properties that cost a little less than the amount stated in your letter. The amount you are approved for is the ceiling, so it’s a good idea to look at homes that are a little less than the full amount. This leaves a little wiggle room for unexpected costs.  

If you are ready to get pre-approved? Get started here.

Tip 5: Buy a Home for Tomorrow 

When you’re creating your list of needs and wants, you’re looking for in a home, it is important you find a property that will fit those needs but will also fit what you will need in a couple of years, whether that be expanding your family or if you are on your way to becoming an empty nester. 

As you are preparing to start your homebuyer journey, keep these tips in mind to set yourself up for a smoother loan experience. If you’re ready to get the process started, our Mortgage Consultants are ready to welcome you home.