Best Tips for First Time Home Buyers

Posted: 04/06/17 04:28pm

Getting engaged to be married typically involves some significant life changes. It's common for engaged couples to begin looking for a house together right away in anticipation of their new life together. The process of buying a home for the first time could span as long as a 12 months from first laid plans to the closing table. To ready yourselves for one of the biggest decisions you will make as a couple, I’ve compiled a short list of things you need to know:

Check your credit scores and get copies. A recent FTC study found that 1 in 4 Americans had errors on their credit reports, and that 5% had errors that would have led to higher rates on loans had they not been caught. Avoid any last minute surprises by checking early and correcting any mistakes that are found.

Determine how much you can comfortably afford. Lenders generally look for a total debt load of no more than 43% of your gross monthly income (referred to as your debt-to-income ratio). This figure would include your future mortgage and any other debt including car loans, student loans, credit cards, etc. There are multiple mortgage calculators you can use under the mortgage calculators tab on my homepage.

Have a down payment plan in place. The average conventional mortgage requires a 20% down payment, and if it is affordable, you should do it. The loan costs will be much less and you will receive a better interest rate. If you are not able to put down the full 20%, there are various other programs that are available to you. Most common is the FHA loan, which requires a 3.5% down payment, but they require mortgage insurance premiums, which will increase your monthly payments.

Gather your paperwork for the loan. This should be done about 6 months out from when you would like to move into your new home. Banks are very particular about what documentation they require. The list includes: W-2 forms and personal tax returns both from the last 2 to 3 years, most recent pay stubs, credit card and all other loan statements, bank statements, a list of addresses for the past 5 to 7 years, references (personal and professional) as well as brokerage (investment) and 401K account statements.

Get a pre-approval for your loan. This should occur around 3 months before you are ready to move. A link to Premium Mortgage is provided at the bottom of my website, and Jackie Ruotsi is very knowledgeable in the entire process and can help you every step of the way. Once the pre-approval is done, you can start shopping for your new home together.

Now that you are prepared and ready to shop for a home, it is time to determine what home is to you and what area is best for your new life together. There are multiple factors to consider when choosing a home:

How long do you plan to live in this home? It may sound odd to think about planning to move from a home you have not even purchased yet, but this one variable can determine the priority of other factors involved. Do you plan to start a family in the house? The answer to this question could sway decisions on the number of bedrooms needed, what school district to look for your house in, etc.

Know your needs versus your wants AND your deal breakers. Everyone has their ideal home in mind, and that home has a list of amenities that are a necessity. Do you need a big backyard for pets? Do you want an open floor plan? Do you prefer to be on a quiet street? Do you need to be close to a certain area for work? It is always good to have a list that is categorized and in order of preference.

Know the different neighborhoods and the value of homes within them. A $200,000 in one area might offer considerably more than a $200,000 home in another. For instance, if you are looking for a top 5 school district (East Aurora, Williamsville, Clarence, Orchard Park, and Iroquois); a $200,000 home in each of the districts will be considerably different. You also have to take in to account the taxes associated with each area. The more your monthly tax payment is, the less you will have available in your budget to pay for your actual mortgage payment. (As me about escrow accounts!!…I’ll explain.)

If this all sounds overwhelming, that is okay. This is why professional Realtors are there to help throughout the entire home buying process. As a Realtor, I take pride in helping couples and families navigate the sometimes-choppy waters of home buying. I am here to help from the first step all the way through closing, and then even beyond.

Jim Budzinski

Licensed Real Estate Salesperson

Office - 716-652-0232

c21.jimmyb@gmail.com