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First-time Homebuyers

Buying a home can be stressful, especially if you're a first-time home buyer. Not at Navesink Home Loans, we guide you every step of the way! Our vast industry experience and process makes your transaction seamless!

These tips will help you navigate the process, save money and avoid common mistakes. We organized them into four categories:

Mortgage down payment tips

1. Start saving for a down payment early

Historically, it was common to put a 20% down payment on a home, but many lenders now permit much less, and first-time home buyer programs allow as little as 1% down. In some areas, sizable grants can be awarded to you that are not required to be paid back. Contact us for eligibility. Terms And Conditions Apply.

2. Explore your down payment and mortgage options

There are lots of mortgage options out there, each with their own combination of pros and cons. If you’re struggling to come up with a down payment, check out:

Mortgage application tips

3. Determine how much home you can afford

Before you start looking for your dream home, you need to know what’s actually within your price range. 

4. Check your credit and pause any new activity

When applying for a mortgage loan, your credit will be one of the key factors in whether you’re approved, and it will help determine your interest rate and loan terms.

So, check your credit before you begin the home buying process. Dispute any errors that could be dragging down your credit score and look for opportunities to improve your credit, such as making a dent in any outstanding debts. Higher credit scores open opportunities for lower rates and loan costs.

To keep your score from dipping after you apply for a mortgage, avoid opening any new credit accounts, like a credit card or auto loan, until your home loan closes.

5. Get a pre-approval letter

You can get pre-qualified for a mortgage, which simply gives you an estimate of how much a lender may be willing to lend you based on your credit scores, income, debts and employment status. But as you get closer to buying a home, it’s advised to get a verified pre-approval letter, where an underwriter thoroughly examines your mortgage application and confirms in writing how much of a loan you qualify for, and under what terms. Having a verified pre-approval letter in hand makes you look much more serious to a seller and can give you an upper hand over buyers who haven’t taken this step.

House shopping tips

6. Hire the right buyer's agent

You’ll be working closely with your real estate agent, so it’s essential that you find someone you get along with well. The right buyer's agent should be highly skilled, motivated and knowledgeable about the area.

7. Pick the right type of house and neighborhood

You may assume you’ll buy a single-family home, and that could be ideal if you want a big yard or a lot of room. But if you’re willing to sacrifice space for less maintenance and extra amenities, and you don’t mind paying a homeowners association fee, a condo or townhouse could be a better fit.

But even if the home is right, the neighborhood could be all wrong. So be sure to:

8. Stick to your budget

Look at properties that cost less than the amount you were approved for. Although you can technically afford your preapproval amount, it’s the ceiling — and it doesn’t account for other monthly expenses or problems like a broken dishwasher that arise during homeownership, especially right after you buy. Shopping with a firm budget in mind will also help when it comes time to make an offer.

In a competitive real estate market with limited inventory, it’s likely you’ll bid on houses that get multiple offers. When you find a home you love, it’s tempting to make a high-priced offer that’s sure to win. But don’t let your emotions take over. Shopping below your preapproval amount creates some wiggle room for bidding. Stick to your budget to avoid a mortgage payment you can’t afford.

9. Make the most of open houses

When you're touring homes during open houses, pay close attention to the home’s overall condition, and be aware of any smells, stains or items in disrepair. Ask a lot of questions about the home, such as when it was built, when items were last replaced and how old key systems like the air conditioning and the heating are.

If other potential buyers are viewing the home at the same time as you, don’t hesitate to schedule a second or third visit to get a closer look and ask questions privately.

First-time home buyer mistakes to avoid

With so much to think about, it’s unsurprising that some first-time home buyers make mistakes they later regret. Here are a few of the most common pitfalls, along with tips to help you avoid a similar fate.

10. Not budgeting for closing costs

In addition to saving for a down payment, you’ll need to budget for the money required to close on your mortgage. Closing costs vary depending on your purchase price and area. You can shop around and compare prices for certain closing expenses, such as homeowners insurance, home inspections and title searches. You can also defray costs by asking the seller to pay for a portion of your closing costs or negotiating your real estate agent's commission. Calculate your expected closing costs to help you set your budget.

11. Not saving enough for after move-in expenses

Once you've saved for your down payment and budgeted for closing costs, you should also set aside a buffer to pay for what will go inside the house. This includes furnishings, appliances, rugs, updated fixtures, new paint and any improvements you may want to make after moving in.

12. Buying a home for today instead of tomorrow

It's easy to look at properties that meet your current needs. But if you plan to start or expand your family, it may be preferable to buy a larger home now that you can grow into. Consider your future needs and wants and whether the home you’re considering will suit them.

13. Passing up the chance to negotiate

A lot can be up for negotiation in the home buying process, which can result in major savings. Are there any major repairs you can get the seller to cover, either by fully handling them or by giving you a credit adjustment at closing? Is the seller willing to pay for any of the closing costs? If you’re in a buyer's market, you may find the seller will bargain with you to get the house off the market.

14. Not knowing the limits of a home inspection

After your offer is accepted, you’ll pay for a home inspection to examine the property’s condition inside and out, but the results will only tell you so much.

15. Not buying adequate homeowners insurance

Before you close on your new house, your lender will require you to buy homeowners insurance. Shop around and compare insurance rates to find the best price. Look closely at what’s covered in the policies; going with a less-expensive policy usually means fewer protections and more out-of-pocket expenses if you file a claim. Also, flood damage isn’t covered by homeowners insurance, so if your new home is in a flood-prone area, you may need to buy separate flood insurance.

 

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