Southern Trust: First-Time Homebuyer

Dated: December 6 2023

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First-Time Homebuyer

6 Tips for First Time Homebuyers

If you’re reading this article, you are more than likely purchasing your first home or are at least interested in taking the first steps towards that goal. That’s something to be proud of! Like any big project, a successful homebuying experience is all about getting the details right from start to finish.

Our team at Southern Trust Mortgage knows that purchasing a home can be confusing for a first timer. You’re faced with a seemingly endless list of tasks, steps, potential fees, and requirements, and might be left wondering whether you’re making the right decision.

You are certainly not alone in your concerns. Buying a home is an emotionally and mentally taxing process. However, with the right amount of preparation and knowledge, you can relieve a large amount of stress.

Read on for the top 6 tips for first-time homebuyers to help you navigate the process, save money, and close the deal like a pro!

 

  1. Take A Good Look at Your Finances

There are many costs to factor into homeownership like home repairs, utility bills, garbage pickup, water, and electricity that many first-time homebuyers forget about.

Additionally, you will also be responsible for taxes and insurance related to your new home. This is not meant to scare you away from purchasing, but rather to prepare you for the laundry list of charges that unfortunately come with the gig. If you are not financially prepared, you could end up in a less-than-ideal position.

Try to reduce your debts as much as possible before applying for your mortgage loan and dedicate a few months or years to saving your money for the large costs associated with home buying.

In general, the costs you will need to consider when saving for a home are:

 

  • The Down Payment

  • Closing Costs

  • Moving Expenses

Once you are satisfied with the state of your finances and are comfortable with the charges you will be paying, you’ll be ready to move on to the fun stuff!

 

  1. Research Home Loan Options

There are a wide variety of mortgages available with varying down payment and eligibility requirements designed to fit most lending scenarios. 

Some of the most popular options are:

 

  • Conventional Mortgage Loans: These home loans are not guaranteed by the government and are designed for well-qualified buyers. Some conventional loans targeted at first-time buyers require as little as 3% down and may even offer reduced mortgage insurance (MI)!

 

  • FHA Loans: FHA loans are insured by the Federal Housing Administration and allow down payments as low as 3.5%. This mortgage option is often more affordable than conventional loans, and highly attractive for first-time home buyers! 

 

  • USDA Loans: USDA mortgage loans are guaranteed by the U.S. Department of Agriculture. They are designed for rural home buyers and usually require no down payment.

 

  • VA Loans: VA loans are guaranteed by the Department of Veterans Affairs. They are specifically offered to current and veteran military service members and usually require no down payment among other perks!

You also have flexibility when it comes to the mortgage term. Most home buyers opt for a 30-year fixed-rate mortgage, which will be paid off in 30 years and has an interest rate that stays the same over the life of the loan. A 15-year loan typically has a lower interest rate than a 30-year mortgage, but the monthly payments are higher.

When interest rates are on the rise, you might consider an adjustable-rate mortgage, or ARM Loan. ARM rates are often lower than fixed rates, enabling you to buy a more expensive home for the same monthly payment, but they can also increase (or decrease) over time.

 

  1. Meet With a Mortgage Loan Officer

In most cases, people need a mortgage loan to make a home purchase. Mortgages come in many shapes and sizes and are designed to fit nearly all individual situations. However, the variety of options can make it difficult to determine which loan product will best fit your needs on your own.

This is where loan officers become mortgage life savers. They will assist you in choosing which loan product that is right for your unique situation and applying for it. Loan officers are also the primary contact with the financial institution throughout the loan closing process and are typically very experienced in serving first-time homebuyers.

At Southern Trust Mortgage, our highly skilled loan officers strive to make every home purchase simple and positive while keeping you on track during your first-time home buying journey. It is important that whichever loan originator you choose makes you feel comfortable and supported throughout the mortgage process.

 

  1. Get The Preapproval BEFORE Shopping

It can be tempting to jump right into hunting for the perfect house, particularly if this is your first time. However, it’s a really good idea to get a mortgage preapproval before you begin comparing properties.

Knowing how prequalification differs from preapproval is also important. Let’s review that difference now.

Prequalification letter: A prequalification is an estimate of the amount you can borrow. It’s based on an informal evaluation of your income and other information.

Preapproval letter: A mortgage preapproval is an official document from a lender that tells you exactly how much loan money you can get based on your financial information, such as W-2s, bank statements, and your credit score.

Benefits of a preapproval:

 

  • You know exactly how much home you can afford. You and your real estate agent know your home-purchasing power once you have a preapproval letter in hand. This will help you shop within your budget.

 

  • You can make a stronger offer. Sellers need to know that the buyer they choose can afford their home, and a preapproval letter shows just that.

 

  • You’ll experience fewer surprises. When you’re preapproved, you’re less likely to run into last-minute delays with your mortgage lender.

 

  1. Request a Home Inspection

So, you found a property that you are serious about. You make an offer on it, and it’s accepted! In all the excitement, you may be tempted to consider whether a home inspection is worth the extra money. The short answer? It absolutely is.

Repeat after me: “you should always get a home inspection before purchasing a new home.” Many first-time homebuyers take for granted the importance of a thorough home inspection. We admit this part of the home-buying process is not very exciting, but it is important. Most lenders won’t even offer financing without an inspection, so it is in your best interest if you are serious about a property.

A home inspection is usually conducted by a licensed professional and reports back on the status of the home’s major systems, utilities, and cosmetic issues. Your home inspector will let you know about any major and minor problems with the home and uncover potentially life-threatening issues like mold or faulty wiring.

As a rule of thumb, most potential buyers have a seven-day window after a home inspection to walk away from the purchase.

As we have discussed, a lot goes into buying your first home, and it is crucial to make sure that the home you’re buying is in good condition before you close. That way there won’t be any unpleasant surprises after you move in.

 

  1. Confidence is Key When Submitting an Offer

You should never submit an offer on a home unless you’re 100% committed to the purchase – or you could risk losing your earnest money deposit, also known as a “good faith deposit.” Giving this money signals to the owner that you’re serious about the offer.

The deposit is typically equal to 1 – 3% of your total home price and goes toward your down payment. If you back out of the sale for a reason not listed in your offer letter, you’ll lose your earnest money deposit.

So be confident in the home you choose!

 

Work With a Lender Who Can Guide You from Application to The Closing Table

Although it is a lot to take in, if you do your research and go into the home buying process prepared, you’ll be well equipped to make your first home purchase a success. Being a first-time homebuyer is an exciting stage in life. Enjoy it!

If you’re shopping for your first home, explore your options with one of our experienced Southern Trust loan officers today!

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Administrative Assistant

I am the administrative assistant at NextHome Tidewater Realty.  I am the one that runs the office behind the scenes.....

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