Tips for First Time Home Buyers

 

Thinking about buying a home?

1. Start saving early

Here are the main costs to consider when saving for a home:

• Down payment: Your down payment will depend on the type of mortgage you choose and the lender. Some conventional loans aimed at first-time home buyers with excellent credit allow as little as 3% down. But even a small down payment can be challenging to save. For example, a 3% down payment on a $300,000 home is $9,000. Set up automatic transfers from checking to savings to get started.  There are also loans with 0% down.  This is different than Earnest Money that shows the seller that you are earnestly proceeding with purchase.  

• Closing costs: These are the fees and expenses you pay to finalize your mortgage, and they typically range from 2% to 5% of the loan amount. You can ask the seller to pay a portion of your closing costs, and you can save on some expenses, such as home inspections, by shopping around. 

2. Decide how much home you can afford

Figure out how much you can safely spend on a house before starting to shop.  Check out NerdWallet’s home affordability calculator.

3. Check and strengthen your credit

Your credit score will determine whether you qualify for a mortgage and affect the interest rate lenders will offer. Take these steps to strengthen your credit score to buy a house:

 

• Get free copies of your credit reports from each of the three credit bureaus — Experian, Equifax and TransUnion — and dispute any errors that could hurt your score.

 

• Pay all your bills on time, and keep credit card balances as low as possible.

 

• Keep current credit cards open. Closing a card will increase the portion of available credit you use, which can lower your score.

 

• Track your credit score. NerdWallet offers a free credit score that updates weekly.

4.  Research First Time Buyer Assistance Programs.

• Check out HomesFund.

5.  Shop around for lenders and compare fees.

• Not all lenders are the same.  Some lenders are offering free appraisal if home doesn’t appraise.  Appraisal fees are paid out of pocket very soon after getting a home under contract and are about $700.  You want to know exactly what the lender will charge for a loan. Roughly it’s about $5000 and that charge will be built into the loan as well as your property insurance and taxes.

6.  Get prequalifed before looking for a home!

• Many buyers start looking and they find a home they would like to purchase however it’s already under contract before they can get a prequalification letter.

Call Carrie Summers with Colorado Ranch & Home Realty  970-759-2540!