7 Tips for First Time Homebuyers

Buying my first house was an amazing experience but it was also a long, tedious process and took years of preparation. I have been a homeowner for a year now and it has been the most significant move I made for my family. My home is my first real asset and starter point for my wealth building journey. I encourage everyone to consider homeownership because there are several benefits, which include building equity, greater privacy, and tax deductions.  Buying a home is a great investment and I have 7 tips for those who want to take that next step so keep reading…

home ownership

Resolve your debt

I knew early on how much of a role good credit would play when it comes to my finances. At age 21, I hired a company to help boost my credit score. They disputed a few accounts and had them removed from my credit history, but as I look back this is easily something I could have done on my own.

Thankfully, I never got myself into major credit card debt, but if you weren’t as cautious you may be consumed by it. Start paying off your credit cards and getting every account on your credit report in good standing. Try to reduce your debt as much as possible before getting pre-approved for a home, because one of the first things a lender considers when deciding on the amount to approve you for is your debt-to-income ratio.

My student loans weighed against my debt-to-income ratio the heaviest. When I was in
college I had no idea that my student loan debt would make me look so bad. If you have student loans make sure you are keeping the accounts current or if you can’t afford to make any payments, see if you qualify for a federal student loan forgiveness program. Act now because this program may not be available forever.

Make ALL of your payments on time!

Choose a lender and realtor

I got connected with a realtor first and she referred me to a mortgage banker so I could get pre-approved for my home. In order to be pre-approved you need to have a consistent job history and an income that will allow you to afford a mortgage payment. You most definitely need a fair credit score as well. You, your realtor, and lender all work together from start to finish of the homebuying process.

Avoid credit inquiries

Credit inquiries negatively impact your credit score. Soft inquiries end up on your report from doing things like opening a bank account or applying for a department store credit card. Definitely avoid any hard inquiries until AFTER you close on your home. From the time you are pre-approved for your mortgage your finances are closely monitored until after you close on your home.

Crazy & true story: While I was looking for a home to buy my car got stolen and I was devastated! It was recovered by the police and was in horrible condition because apparently the juveniles who decided to take a joy ride in it wrecked it. My car was deemed a total loss, so I had to borrow rides until after I closed on my home and was in a position to finance another vehicle.

Come to find out I have a ridiculous interest rate on my auto loan!  I drive an SUV and I love it, but I was desperate to get a new car and ended up with a bad deal.  Had I known what I know now I would have negotiated stronger or avoided financing a loan altogether.  But my auto loan is in my debt snowball so it will be paid off in no time!  I will forever associate 2018 as the year I became a homeowner and got my car stolen.  Wild year..

Don’t Overdraw Your Bank Account

Once you are pre-approved for a home, your lender will ask you for countless documents, including your bank statements. They check to see how your ending balance trends at the end of each statement period so make sure you are not consistently in the negative. Manage your money by creating a budget to stick to. 

Also make sure any money you are depositing has a paper trail. You report your income to the lenders, and if they notice money coming in that isn’t from your wages you will have to provide an explanation for it. I had to write statements explaining that some of my deposits were “gifts from family”. They consider every last detail which is understandable considering the amount of money they are loaning.

Have enough money saved for a down payment and closing costs

Putting 20% down on your home is a commonly recommended amount, and it will look financially strong on paper. But if you can’t put that much down it’s not the end of the road. The required down payment amount depends on the type of loan you are applying for. There are FHA (Federal Housing Administration) loans and conventional loans. For an FHA loan, the minimum you would need to put down is 3.5% if your credit score is above 580. You may still qualify for a FHA loan even if you suffered from bankruptcy or foreclosure.

During the homebuying process you will also have to pay for home inspections so you need money saved for that and the closing costs as well. Closing costs may total a few thousand dollars. Check to see if your state has any grants available for first time home buyers (free money!) that can be used towards closing costs and/or down payments.

Know what you “must have” in a home

Before you start looking for a home, know what it is that you are looking for.  Understand that you may have to make some sacrifices or compromises depending on how much you get approved for etc. For me, it was important that I had an open kitchen area, two bathrooms, at least 3 bedrooms, a nice neighborhood that would allow my kids to stay in the same school district and a backyard. I got everything I wanted in my first home, too, because of my unwavering faith. Which leads me to my last tip..

Have Faith

As I mentioned before, purchasing a home is a diligent process, but on closing day when you get the keys you will realize it was all so worth it! My realtor showed me at least twenty houses and I ended up making three offers. It was discouraging when two of the sellers did not accept my offers. I had to keep in mind that what God has for me is for me.

I actually made two offers on the home I’m in now. The first time, another buyer’s offer was accepted over mine. Unfortunately for them and luckily for me, their financing did not go through, so the house went on the market again. I made a second offer, and even offered a little more than the asking price and wrote a letter to the sellers explaining to them how much I loved the house and how much my family and I needed it. I was determined and never lost faith. My offer was accepted and my financing was approved in perfect timing. Having faith sends signals to the universe that you are committed, you are a believer, and you are open to receive your blessings.

I hope this was helpful. Just remember to Trust Your Process.

xoxo

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Parking

There are parking meters, two paid lots, and a paid parking garage on 8th street. Monthly Passes are optional. 

These are the designated parking options when visiting The Presley Post. 

Do not park in the lot behind our building. This is a violation and your car WILL BE TOWED at your expense. NO EXCEPTIONS.

This lot is reserved for the law office upstairs and it is being watched.

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