Buying your first home is not something you or anyone should take lightly. You should be prepared with as much information as possible and you should understand your local real estate market and the current mortgage market.
First off, How much home can you afford?
As a first-time home buyer, it’s important to have an accurate idea of how much money you can borrow for your new home and most importantly, how much you can afford.
Should you get pre-qualified or pre-approved?
With a pre-qualification, little information about your finances is verified (often none). What you need is pre approval in which more information (your credit and other factors) is checked and you can have a better idea how much you can afford for your first home.
What is your credit score?
First time home buyers should obtain a copy of their credit report, review it and make any corrections. Some great free tools are out there for you to use. www.FreeCreditKarma.com and www.FreeCreditScore.com are two of the most popular.
What kind of mortgages should you consider?
The mortgage best for you will depend on:
Your current financial situation, whether or not your financial situation will change in the next few years, and how long you want to stay in your home.
What documentation do you need?
W-2’s, Pay Stubs, Bank and or other asset statements.
What is a reasonable offer?
A knowledgeable agent can be very helpful in deciding how much your offer should be.
What is a sales contract?
The sales contract sets the amount of your offer and usually includes extra details, such as which appliances stay, who pays closing costs, and when you’d like to take possession of the house. Your agent will have you sign the sales contract and offer earnest money. Earnest money is a deposit showing that you’re serious about your offer to buy the home, and is later applied as part of your down payment or other closing costs.
Do you need homeowner’s insurance?
Yes you’ll need a valid homeowner’s insurance policy before you close on your home. You can’t get a mortgage without it.