One of the most important steps in your financial and personal life is the purchase of your first home. If you’re a first time home buyer, you may be overwhelmed just trying to watch up to date mortgage rates and market data. Fortunately, your first home purchase can run smoothly if you find the right professional help and plan before you buy.
Find a Trusted Mortgage Company
As you start going through listings and the most up to date mortgage rates, make sure that you work with a professional from the beginning. Las Vegas realtor Steve Anderson explains that many first-time home buyers start by looking for their dream home, then start talking to mortgage companies and lenders later. This is a mistake. Instead, you should do your research and see if your family and friends can recommend any mortgage lenders that can offer unbiased advice. After you’re preapproved, the hunt for your perfect house will be a lot easier.
Decide what Loan Works Best for You
The most common type of loan is a 30 year fixed rate mortgage loan, but many homeowners also opt for a 15 year loan in order to decrease their monthly spending that much sooner. Still other home buyers who plan to sell after only a few years opt for an adjustable-rate mortgage, where your interest rate is up to three percent below the most up to date mortgage rates but expires after a fixed amount of time. Talk to your mortgage broker to decide what is the best fit for you.
Don’t Use All Your Savings on a Down Payment
While homeowners don’t have to pay mortgage insurance when they put down at least 20% on their down payment, first-time home buyers may end up draining their savings without considering additional costs that come with owning a home. They may also be left without a rainy-day fund in case the unexpected happens. Experts agree that you’re better served by just paying for the mortgage insurance so that you can have some reserved for emergencies.
Look into Additional Loan Programs
There are plenty of federal programs
in place to help first-time home buyers and those with special circumstances purchase a home. There are federal loan programs available if you are:
- An active duty member of the military
- A teacher
- A member of law enforcement, a firefighter, or an emergency medical technician
- Native American or American Indian
- Planning to buy a home in a rural area
- Planning to make your home more energy efficient
Look into an IDA
Individual Development Accounts (IDAs) are matching programs for people who are low-income to allow them to start a business, invest in post-secondary education, or buy a home. They are often offered locally through non-profit organizations and credit unions. Requirements and amount matched vary by location, so look into local options to see if you qualify.
Buying your first home is never easy, but with proper planning, you can find your perfect home that works with your budget.