How to best prepare for your first home purchase

While buying a house is a dream for many, navigating the process, especially for first-timers, can feel overwhelming in a competitive market. By prioritizing preparation, first-time homebuyers can increase their chances of landing their ideal home and have a low-stress experience. Here are some suggestions for any first-time homebuyer to consider.

• Downpayment funds: Downpayment doesn’t have to be 20% as many people believe. FHA Loans offer as low as 3.5% down and VA Loans requires $0 down. There are many Downpayment Assistance plans that are regionally targeted. Having a “gift” from family or friends may be another possibility. Discuss these options with a trusted mortgage lender before embarking on that home search. Some savvy prospective homebuyers live with family for a period of time in order to maximize their savings ability.
• Keep your options open: Have an open mind when you begin the actual home search. Take a look online at a variety of homes types — condos, townhomes, single family homes — in neighborhoods that are affordable and within your budget. The object is to get yourself into homeownership. The sooner you’re a homeowner, the sooner you’ll be building equity to go toward that home you’re dreaming of. Remember, you’re making a monthly payment, why not make it toward YOUR mortgage, rather than toward a landlord’s investment? This is your first home — not your forever home!
• What are your housing needs? Consider — What size will best suit you? Do you need space and privacy for a piano or a drum set? A guest room for regular out-of-town guests to spend a weekend? A yard for outdoor athletic activities or an indoor room for a home gym? Work-from-home quiet space? Is a 2-car garage a must? Come up with your deal-breakers list and differentiate between your must-haves and your like-to haves!
• Establish a relationship with a reliable lender. Getting a “pre-approval” is nice, but not worth much in today’s competitive market. Once you are fully underwritten with a lender, your offer will have the advantage over a pre-approved buyer in the eyes of a savvy Seller. When you are through the underwriting process, you can waive contingencies to compete with all-cash offers and offer a quick closing as well. What is Underwriting? You can get much of the home financing process out of the way and obtain a loan commitment letter before you even begin searching for a home by being fully underwritten for a mortgage. A Loan Underwriter reviews your loan file and issues a commitment to lend, provided required conditions are met — including but not limited to — employment verifications, IRS transcripts, Credit score, updated bank statements, assets review, and documentation required for gifts or liquidation of assets. For more info, look here.
• Closing costs exist! There are a lot of little fees that can add up to a big number if you aren’t conscientious about your loan. Ask for a loan disclosure and look at each fee. Discuss them with your lender. Sometimes there are hidden fees… Sometimes the lender can waive fees if you ask. Always ask for a Lender Credit, it’s just a discount;)
• Connect with a Realtor who is reliable and who promotes your best interests throughout the entire process. Your agent should take into account your specific and individual needs and be respectful of your financial and personal goals. A great Realtor will not only show you homes within your budget and aligned with your personal preferences, they will provide advice and counsel that comes with the experience of successfully completing many transactions.

Knowledge is power! Knowing the steps involved in preparing to buy your first home can keep you calm and focused during what might otherwise be an emotional time. By preparing beforehand, you’ll be better equipped to track important details and navigate the journey smoothly. Stay informed about financial options, prioritize your needs in a house, be realistic about what’s out there in the market, work with a savvy mortgage specialist, and find a Realtor who promotes your best interest. Buying a home can be an exciting learning experience that leads to a wonderful reward!