Purchasing your First Home
Has the time come to purchase your first home? Becoming a first-time homeowner is one of the most exciting times in your life, and there are ways to set yourself up for a positive experience. There are many steps in the home buying process, and we want first-time homeowners to have all the tools necessary to strike a deal of a lifetime with the home of their dreams. We encourage individuals who are purchasing a home for the first time to consider these five tips when thinking about starting their homebuying journey:
- Get preapproved. A lot of temptation builds up when you realize that you are ready to purchase a home for the first time, especially if you feel pressured to spread your wings and leave your parents’ house. An excellent way to start the process is to seek a prequalification letter, and once you know the time is right, get preapproved. Knowing the difference between a prequalification letter and a preapproval letter is essential, so we will unpack it for you.
- Prequalification Letter: Provides you with an estimate of the amount you can receive for a home loan. Your income and other informal information will be used to gauge the amount you prequalify for.
- Preapproval Letter: An official document provided by a lender that uses your financial records, such as bank statements, credit scores, and W-2, to indicate precisely how much your mortgage loan will be.
- Determine your needs and wants. Finding a home that is fitting for you is crucial. People purchase homes for the first time at all stages of life. Whether you are a young single individual, a newlywed couple, or have a spouse and children, there are going to be specific requirements that you are looking for. Decide the type of home you desire and focus on seeking homes that meet your needs and requirements.
- Have a healthy down payment. Ensuring that you have acquired the funds to purchase a home without worrying about drowning in debt is essential. The good news is that there are down payment assistance programs that can help first-time home buyers with loans and grants.
- Understand which loan will suit you best.Homeowners-to-be can choose from various types of loans, which will determine everything from the type of home you can purchase to your down payment amount and more. The different loan types include:
- FHA: FHA loans are not as strict regarding credit score requirements. Credit scores down to 580 may be accepted, and down payments as low as 3.5% are often approved.
- Conventional: Conventional loans are the most common types of loans and will allow homeowners to purchase with as little as 3% down.
- VA: VA loans are for veterans, the National Guard, the armed forces, or qualifying spouses. With VA loans, a home can be purchased with 0% down.
- USDA: Qualified suburban or rural areas may offer USDA loans. Although an individual with a USDA loan may be offered 0% down, they may be subjected to household income restrictions.
- Remember closing costs. First-time home buyers must remember that there will be closing costs before closing on a home. A down payment is one of the times you will have to put money into closing on your home. What are closing costs? Closing costs are expenses paid upfront to your lender in exchange for varying loan services. Standard closing cost service fees are for:
- Escrow
- Appraisal
- Attorney
- Homeowners Insurance
- Property taxes
- Insurance
- And more!
As first-time homeowners, we want you to be excited and aware. At CGI Realty, our primary goal is to watch you flourish through this prime time in your life while feeling secure that all measures will be taken to ensure a seamless process. If you are prepared to start your journey, visit our website or contact us today at (561) 507-0107.