Purchase Guide for First Time Home Buyers

young people with moving boxes

Are you considering buying a new home for the first time? Making the decision to become a homeowner is a big one. Often, we hear that a potential home buyer is nervous to take the leap into ownership due to added responsibility of ongoing maintenance (and accompanying expenses) or lack of savings for a down payment. Without diminishing these (and other) concerns, homeownership might not be as far off as you think. We have advice to get you started on your home purchase journey — read on for our purchase guide.

Have a Budget

Making the switch from paying rent to making mortgage payments requires you to rethink how you are budgeting. Taking your normal expenses into account, figure out how much you want to pay each month on a mortgage. This amount will be consistent and predictable based on your type of mortgage loan. There are a number of online calculators or other resources that can help you figure out “how much you can afford” when looking at houses for sale, but these should not be how you determine what price range suits you. When buying a home, you also want to consider what the next three, five, or even ten years may have in store so you can factor this into your plan. Is your family growing? Will you be attending graduate school or almost done paying student loans? Are you thinking of moving to a new city soon? These considerations will also be factors for the type of residential loan program (and the terms) that suit you best.

Ready to build a budget but not sure where to start? Download our Mortgage Budget Worksheet or contact a Loan Officer.

Know Your Credit Score & Fix Any Issues

Your credit score is a numerical representation of your financial history, indicating with a score how well you’re paying your bills, keeping your overall debt under control, and ongoing personal responsibility. Lenders use your credit score in their analysis of any loan application (including a mortgage) to help determine credit risk. A low score can mean your interest rate will be higher, your down payment must be larger, or even hurt your chances to receive loan approval.

Since your credit score is based on your credit report, you should check that report regularly, looking for any discrepancies in payments and your credit accounts. Don’t wait to address any issues or try to increase your credit score. There are simple steps you can take today to raise your credit score.

Related: Common Mistakes That Make Your Credit Score Drop (and How to Fix Them)

Find a Loan Officer or Lender You Want to Work With

For most of us, the largest investment we ever make is buying a home. You should have someone supporting you through the entire process of this significant financial transaction. A mortgage loan officer is an expert in your corner, so find one that you like. A mortgage loan officer is there to work with you and support you every step of the way.

Signs of a good mortgage loan officer include:

  1. Will get you in a home you can afford, not one that makes you ‘house poor’.
  2. Responsive to all your questions and offers answers to questions you might not know to ask.
  3. Comes up with a plan for you, not a cookie-cutter approach.
  4. Is well versed in the grants and financing options available exclusively to first time home buyers, including state-specific opportunities.
  5. Experienced in order to catch red-flags or potential issues on your behalf during the home purchase process.

Bottom line: Having a mortgage loan officer you like and can build trusted rapport with will make the entire experience more positive. Our team of experienced professionals are ready to help you. Meet our Mortgage Loan Officers and connect with us.

Prepare Your Mortgage Application

Early in the home shopping process, it is important to connect with a Loan Officer and get pre-qualified. There are many mortgage programs and grants that are specifically for first time home buyers, which a loan officer can share based on your unique circumstances. You will be able to get a more accurate understanding of current mortgage rates and terms, too.

Keep Ongoing Records of Income & Debts

Make sure that you have access to past pay stubs, W2 forms, tax records and other official documentation that helps show your income and debts on paper.

Maintain Steady Employment

Demonstrating stability by keeping the same job throughout the mortgage application process will benefit you as a first-time home buyer. While your application and closing are underway, having the same employer will make the entire process proceed more smoothly.

Shop Rates in Acceptable Window

Your rights as a mortgage borrower are to shop as many lenders as you’d like, and credit bureaus have a formal policy to allow this without any adverse impact to your credit. However, there’s a limited time—a 14-day window—for any credit pulls to occur, so your inquiries and applications must be submitted carefully.

Our Loan Officers can help you manage this, so reach out to learn more or submit an application to get started today.

Don’t Sabotage Your Closing

You’ve found a home, extended an offer, gotten your mortgage approved and scheduled your closing. Congratulations! While it may seem like everything is over and you’re ready to move, there are actually more steps that need to be completed before you can sign on the dotted line. Our Fidelity Bank Loan Officers have witnessed many first-time home buyers make inadvertent missteps during this point in the process, making closing more challenging or extending the overall timeline.

Some common mistakes to avoid:

  1. Make big purchases like new furniture or appliances before your home closing date.
  2. Open a new line credit, including an auto loan for a new car.
  3. Change employment status or employer.
  4. Open or close a bank account.
  5. Make large deposits into your bank account.
  6. Not asking questions or communicating with your Loan Officer.

We are here to help! Contact a Loan Officer with any questions or for more information if you are interested in purchasing a new home.

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