First-Time Buyers: Foresight Over Hindsight

by David Sanders 10/04/2020

Photo by GaudiLab via Shutterstock

In the rush and excitement to find the perfect home and make it yours, there are some things best learned beforehand rather than through hindsight. Here are some suggestions from first-time homebuyers that would have made the entire process less challenging.

Know where you stand.

If you plan to buy a home, even if it’s a couple years out, you need to assess your current creditworthiness so that you can move the needle to improve your credit score. Making sure that your credit reports show the correct information is not something to leave to chance.

  • Order your credit reports from each of the three major reporting agencies (TransUnion, Equifax, and Experian).
  • Review all the entries carefully. Sometimes, credit card accounts have different names on the credit report than on your card, so review your statements to match up accounts with their identifiers.
  • If you find mistakes, request a review with the credit agency. All three have error mitigation instructions on their websites. Follow the instructions carefully.
  • Review any slow pays and rearrange your payment schedules so that you’re up-to-date and on-time for everything.

Create your budget.

While this doesn’t work for everyone, a good rule of thumb is to keep your home price within two and a half times your annual income. That means if you make $80,000 per year, set your budget at $200,000 or less. If your income calculation includes dual partners or spouses, but you intend to add children to the household, consider how you might eliminate that second income. If you calculate your purchase based on one income your budget is more secure.

Determine your down payment.

First-time homebuyers typically qualify for FHA loans with just a 3.5% down payment. Others may be eligible for VA, USDA or Conventional 97 LTV programs too. But with less paid down, your mortgage payments increase because the loan is higher and includes the added cost of Private Mortgage Insurance (PMI). If you can put more down to get a better rate and reduce your mortgage payment, consider it. Conventional loans usually ask for a 20% down payment, but you’ll often get better interest rates and lower payments.

Decide on a loan term.

A fix-rate mortgage for 30 years is the norm, but not the only option. You can find loan terms for 8 or 15 years too. If an adjustable rate works for you in the short term, you’ll find those as well, but if you choose an adjustable-rate only because you couldn’t otherwise afford the home, you might want to wait or adjust your budget.

Get pre-approval from your lender.

Your bank looks at all your income, assets, credit history and other aspects. Getting the lender to give you an informal approval helps you determine if you’ll be able to borrow a specified amount of money to buy a home. Use the numbers your lender gives you to refine your budget.

When you’re ready, find a buyer’s agent to represent you in your home search and let the games begin.

About the Author
Author

David Sanders

Sanders Properties’ primary business aim is to provide each of you – our customers – with a complete host of personal services that simplify the buying process and ease the tension in buying a home. We do it by insuring all the essential information and all support service for buying a home are right at your fingertips. It’s our unique one stop shopping service, consisting of our seasoned real estate sales agents, who live in the county and know every nuance of every neighborhood; plus a consortium of top flight, cost efficient inspection engineers, legal professionals and mortgage brokers. And, if carpenters, electricians or painters are needed, we got them, too. Whatever you need, it’s here! Personal Service makes all the difference. It’s what makes you a satisfied home buyer. It’s what makes David Sanders the No. 1 Sales Agent in lower Rockland County. SandersHomes.com is synonymous with Rockland County homes, Hudson River homes, luxury homes, Palisades homes, Piermont homes,Grand View homes, Haverstraw homes, South Nyack homes, Nyack homes, Upper Nyack homes, Upper Grandview homes, Snedens Landing homes, Stony Point homes, Tappan homes, Orangetown homes, Clarkstown homes. You just might say, homes are us! Sanders Homes Real Estate is the premier realtor in Nyack NY, offering you complete access to all Rockland County homes for sale. Whether you’re looking for a simple Cape or a Hudson River estate, we can help you find the house that’s right for you. Our experienced, informed sales agents are waiting to open the right doors for you. So, when you need the right Nyack realtor to help you find the right Rockland County home, come to Sanders Homes Real Estate, we’re conveniently located in the heart of Nyack’s business center. Yes, come and discover, first-hand, our hallmarks: Integrity Trust Service Sales SERVING YOU. It’s our greatest privilege