Tips For You First Time Home Buyers...

By Ryan Jensen

So you’ve decided it’s time to buy your own place. Whether you have just finished school, finally got that dream job, and just can’t live at home for a minute longer, you are ready to take that next big step in your life. Personally, working with first time home buyers is one of my favorite parts of this job. It’s fun to work with people that are as giddy and excited about the experience as though it were a first date. There are also lots of questions and concerns about how the process works. But let me tell you, being a first time home buyer is not as difficult as it used to be. If you have a steady job and decent credit, you may find the process a lot simpler than you would have thought. Here are a few tips for you as you prepare to buy your first place.

1)      Make sure your credit is in order. A lender will want to see that you are a responsible debtor. A good rule of thumb would be to have at least 3-4 trade lines (i.e. credit cards, auto loans, student loans, or lines of credit) that show a good history of payment and are at least 2 years old each. Some lenders will accept less than this, but the rates will not be as good. It also helps if you have been renting to be able to show a good rental history. The lender will want your landlord to verify that your payments were made on time.

2)      Although you do not necessarily need a down payment to buy a place these days, it is a good idea to have some “reserves” set aside. Try to have about 2 to 3 months worth of your anticipated new mortgage payment set aside in a savings, checking, or investment account. These funds will not be required to be paid out at closing, but rather it shows the lender that you have the ability to cover a few months of mortgage payments should you encounter a rainy day. Once again however, there are lenders that will not require any reserves at all in order to get a loan, even up to 100%. But if you’re after the best rates the market has to offer, try to have some set aside.

3)      As mentioned, first time home buyers can get into a home with no down payment. However, even with the mortgage company lending you enough to cover 100% of the purchase price there are still closing costs associated with the loan. But even those can be covered so that the borrower puts zero cash into the deal. The mortgage company can cover closing costs in exchange for a higher rate, or your realtor can negotiate with the seller to build closing costs into the purchase price. The latter is the more common way this is done.

4)      Don’t rush into the process. Intelligent home buyers will take their time to look at the numbers before they fall in love with a house they can’t afford. Talk to a lender to find out what you qualify for before shopping with your realtor. It will help you to know what price ranges to look at before you fall in love with that gorgeous new home around the corner.

5)      Have fun with it. This does not have to be a high stress process.

     Visit Ryan @ The Jensen Group Mortgage Corporation.