Tips for First Time Home Buyers

Buying a home for the first time can be one of life’s most stressful experiences. There are a multitude of decisions that need to be made and there will almost always be a nagging feeling that something will go wrong. Most of the fear and stress is due to a lack of knowledge and understanding of the process. Knowing what to expect can make the purchase go more smoothly.

Credit

A buyer’s credit rating will go a long way to deciding what mortgage rate they are eligible to receive and after the housing market mess of a few years ago, qualifications have become more stringent. Before applying, make sure to get bank statements, W-2s and tax returns ready.

*Reports – Individuals should review their credit reports to understand where their rating stands and get a good idea on what lenders will be seeing.

*Debt ratio – Lenders will look at the amount of debt a person has compared to their income to decide whether they can afford to add the expense of a home. Ideally, the debt ratio should be no more than 28-30 percent of overall income.

*Adjust – If the credit rating is not ideal or the debt ratio is too high changes should be initiated before going to see a lender.

The search

Finding the right house at the right price is not easy and likely won’t happen on the first try. Be patient and don’t rush into anything.

*Compare – Look at the prices of comparable houses in the area to make sure any house being considered is not overpriced. On the other hand, if a house seems underpriced, that could be a signal that something is wrong.

*Make plans – Look for a house that fits the current situation but also any plans for the future. If children are desired make sure there will be enough room later. Pets may need a large yard in which to play. Also consider nearby amenities, such as shopping, health services and proximity to work.

*Price – Use an online mortgage calculator to determine what price range should be considered. Keep in mind the price of a home is more than just the monthly payment on the mortgage. There will also be insurance costs, which can vary by region, and maintenance expenses that can be unpredictable.

*The offer – Once the perfect home has been found it is time to make an offer. If accepted by the owner, the prospective buyer will then have a period of time to secure the proper financing. During this time an appraisal of the property will be held to make sure the home is structurally sound and not deficient. If changes need to be made, the lender and real estate agent will be guides.

Buying a home for the first time is the realization of a dream for many people but it doesn’t come cheap. By being prepared and knowing what to expect the purchase will be less stressful and more enjoyable.

This post has been contributed by Christina Lloyd, who writes for an education tuition grants website that has advice on sources of financial aid for college students, such as federal student grants. Christina thinks first time home buyers can take some of the stress out of the process by doing proper research and being prepared.