We know, there are so many things to learn and think about before buying your first home. So, we thought we’d simplify things and give you a Do and Don’t list.
- Shop Too Soon
You need to apply for a mortgage before you do anything else. Since there are few homes on the market, competition is tight for those that are for sale. If you don’t have a mortgage locked down, you might lose the house of your dreams to someone that does. And knowing how much you can afford will help you be more realistic when it’s time to house hunt.
- Wait to Make Plans
Planning ahead will ensure you’ve got the money for your down payment and closing costs before you sign on the dotted line. Planning ahead will also let you pay down your debt and add to your savings. Put together a budget and a timeline to ensure you’ve got a plan in place.
- Look Beyond Your Budget
We’d all love to buy that big dream home with the big yard and picket fence, but sometimes we need to begin with a smaller starter home. Stay away from wistful shopping and stick to your budget when you house hunt.
- Go Crazy with Your Credit
Once you’ve got a mortgage nailed down, stop spending, opening up credit cards or getting new loans. This will all affect your rate and ability to get that final mortgage. Curb your spending till you’re in your new home, and even then – stick to your budget!
- Pick a House Instead of a Neighborhood
You don’t want the best house in an undesirable neighborhood. Do some research looking at taxes, school districts, etc. and narrow your search down to a few neighborhoods. Then you can pick your new home in a neighborhood you like.
- Follow Your Emotions
It’s easy to follow your heart or your gut when buying a home. Use your brain instead. You don’t want to get too attached to a house before you get all the facts. This will stop you from paying too much for a home and blowing your budget.
- Worry About 20% Down
It’s called the Myth of 20% Down. Although having a 20% down payment would be great if you could do it, you can buy a house with much less. Sometimes you could need only 3% down to buy a home. Just be prepared to pay for mortgage insurance with a low down payment.
- Ignore Government Loans
As a first-time home buyer, it’s easy to overlook loans from the Federal Housing Administration (FHA), the S. Department of Veterans Affairs (VA loans) and the U.S. Department of Agriculture (USDA loans).
- Misjudge Costs of Home Ownership
The costs of buying and owning a new home don’t end when you sign your mortgage papers. Be prepared to pay for property taxes, mortgage insurance, homeowners’ insurance, repairs, maintenance, utilities and more.
- Forget About Gift Money
If you’re relying on parents or other family and friends to help you with your down payment, get it lined up before you finalize your mortgage. Get a copy of the check or electronic transfer or a signed gift letter before proceeding.
- Research Mortgage Options
Get online and see what all your options are for mortgages. Don’t forget government loans (mentioned above) as well as your credit union for a mortgage, we usually have some of the lowest loan rates around. Make sure to get a preapproval letter once you’ve applied.
- Save for Your Down Payment
Do this from the moment you first think about wanting to own a home one day. Figure on saving about 5%, but save more if you can. The larger the down payment, the lower your monthly payment will be!
- Get a Good Buyer’s Agent
Many first-time homebuyers don’t realize it’s in their best interest to get a Realtor to help them. They know neighborhoods, prices and school districts. They’ll save you time and money, so get one as soon as possible.
- Stick to Your Budget
Once you’ve been preapproved for a mortgage and looked at your budget and savings, you should know what you can afford. Don’t stray from it for a bigger and “better” home that you can’t afford.
- Budget for Closing Costs
Many new homebuyers only look at the cost of the house when budgeting how much money they’ll need. Don’t forget there will be closing costs on top of that. They usually run 2% to 5% of your loan amount. You can’t get a mortgage without them!
- Factor in Moving Expenses
From paying for actual movers to utility deposits, furniture, appliances, rugs, etc., it’ll cost you even more once you’ve set a move-in date. Make sure you have enough saved to pay for them all.
- Buy a Home for Your Future Needs
If you’re newlyweds, you might be planning a family. Be sure your new home will have room for the eventual additions to your family. You want a house you can grow into, not grow out of.
- Remember Home Inspections
Once you’ve had your offer accepted, be prepared to pay for a home inspector. They’ll check for mold, needed repairs, pests and more. If there are more repairs needed than you thought, negotiate with the sellers to get things fixed or be prepared to walk away if needed.
- Secure Adequate Homeowners’ Insurance
Another thing you’ll need before signing on the dotted line is homeowners’ insurance. Start with the company that you use for auto or renters’ insurance, and then shop around. WWFCU members can get a discount on homeowners’ and auto insurance from TruStage.
Whew! We hope these dos and don’ts aren’t too overwhelming. But there are a lot of things to consider as a first-time homebuyer. Use this list as a guide and you’ll be home sweet home in no time!
Have questions or want to get preapproved? Speak with and experienced mortgage expert from our partner Mortgage Center at 800-353-4449 today.