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  • Writer's pictureLisa Paller

Advice for First Time Home Buyers

Buying your first home is one of the most exciting times in your life. Buying a home is also likely to be the biggest investment you'll ever make. Though the home buying process can be confusing, it doesn’t have to be. With the right tips and tricks, you can make the most of each step, from house shopping to closing.

Here’s some of the best advice from Working Moms Realty.

Credit and improve your credit

As a first-time homebuyer, one of the first steps to take is to pull your credit reports and review your credit score. Your credit has a huge impact on your ability to obtain a mortgage loan as well as your borrowing terms.

After pulling your credit reports, review it for any errors or past-due accounts that may have been sent to collections. Any negative marks on your credit bring down your score and may be roadblocks when applying for a home loan.

If your credit score is within the good range or better, maintain your score over the next few months. To keep your score high, be sure to:

  • Pay your bills on time

  • Pay down debt

  • Avoid opening new lines of credit

  • Minimize credit use

  • Keep credit utilization below 30%

A healthy credit score is a must if you want a mortgage loan with favorable terms. The higher your score, the better interest rate you’ll get on your loan.

Set a budget

It’s all too easy to spend hours looking at home listings in your area. But looking at homes without setting a budget is dangerous! As a first-time homebuyer, setting a realistic budget is key.

Look at what you spend each month on other bills and figure out how much house you can afford. Just because the bank approves you for a certain amount doesn’t mean that you can comfortably afford it.

Don’t fall into the trap of being house poor. Set a budget, know how much house you can afford, and only look at homes that are within your budget.

There’s nothing worse than falling in love with a home you can’t afford!

Save for a down payment

Now that you have an idea of how much house you can afford to buy, the next step is to start saving as much money as you can for a down payment. Depending on the type of loan you get, you may have to put down as much as 20% of the purchase price.

Conventional loans require a 20% down payment if you want to avoid paying private mortgage insurance (PMI). This is an additional monthly fee that is paid to your lender to offset the risk of you defaulting on the loan.

The good news is that as a first-time homebuyer, you have access to various state programs and you may qualify for a Federal Housing Administration (FHA) loan. If you qualify as a first-time homebuyer, you’ll only have to put down 3.5% of the purchase price.

No matter the type of loan you get, the more you can bring to the table, the less you’ll pay towards interest each month.

Find a great realtor

An amazing realtor is priceless. Find a realtor that not only knows the area well, but one that you trust and connect with. House shopping and buying with a realtor at your side makes the process a lot easier.

Your agent will work to find home listings that meet your budget, wants, and needs. They will also ensure that you’re getting a fair deal on the home so that you get the best bang for your buck.

Working Moms Realty not only fits the bill here, but is a great source for first time home buyers. Our team is knowledgeable, patient, and we know firsthand how to make the process fun and enjoyable.

Know your wants and needs

Another part of the home buying process is knowing what you want and need out of a home. With so many homes to choose from, it can be overwhelming to know which one is best for you. There are many details that you’ll want to decide before home shopping, including:

  • Location

  • Number of rooms/bathrooms

  • Type of house

  • Lot size

You’ll also want to jot down any deal breakers. Setting criteria for your first home makes it much easier to narrow down a list of potential abodes.

Shop for a lender

Once you figure out your budget and have a good idea of the type of house you want to buy, the next step is to find the right lender. Just as you shop around to get the best deal on a car or new pair of shoes, you also want to shop around for the best mortgage loan.

Compare mortgage rates from various types of lenders, including large banks and credit unions. You may also want to look at the different types of mortgages available to you to determine which one is best.

If you plan to stay in the home for a long time, a conventional 20- or 30-year loan is best. Otherwise consider an ARM loan.

Get pre-approved

Though it can be quite tempting to jump into the hunt for your perfect home, you’ll want to get pre-approved first. Once you choose a lender, work with them to get a pre-approval letter. Getting pre-approved has all sorts of benefits. First, you know exactly how much you can afford. This helps you to shop within your budget.

Getting pre-approved also makes your offer stronger. Sellers want confidence knowing that the buyer they choose can afford to buy their home. A pre-approval letter is proof that you’re approved for the money needed to complete the purchase.

Last but not least, getting pre-approved makes the home buying experience much smoother. You’re less likely to run into delays or surprises with your lender.

Begin your search

Once you’ve got your budget, lender, preapproval, and real estate agent squared away, now comes the fun part: house shopping! Start by browsing listings online. Your agent will also send you home listing for you to browse. When you find a house that you’re interested in, work with your real estate agent to schedule a showing.

For each home you visit in person, make a list of what you like and don’t like. Write down any issues that you spot, as they can be included as contingencies when your realtor submits your bid on the home.

Start the home buying process today!

Looking to buy a home in Chattanooga or the surrounding area? Working Moms Realty is here to help! We’re experts in Chattanooga real estate, so you can count on us to find your dream home. Contact us today and let’s start your home buying journey together!

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