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Some employers are now adopting housing incentives to help employees cover down payments and closing costs. Your employer may give you a grant or a loan that’s forgivable over time, and your labor union might also offer closing assistance. There’s a lot to think about when buying a house – and it’s normal to have questions, especially if it’s your first time. You might be wondering about some general first-time home buyer tips, or the best way to get down payment assistance or help with your closing costs. A larger down payment can get you a better rate, lower your monthly payment, and increase your equity, so it’s a great choice if you can afford it.
At this point, you can walk away from the deal or pay the difference between the appraised value and the purchase price. Also, home sellers cover all real estate agent fees unless otherwise stated. It’s key to get a real estate agent that represents you, instead of a dual agent that represents the seller, too. This home buyer mistake can prevent both the buyer and seller from having fair representation. Pre-approvals are a dress rehearsal for your mortgage and are necessary to make a serious offer on a home.
Get a Mortgage Pre-Approval
Start saving early, improve your credit, and consider what you want in a home. These steps will allow you to lay the groundwork for your first home -- and will help immensely as you begin reviewing your financing options. Follow our first time home buyer checklist as you navigate the process of buying a home, and don’t forget to protect your new asset with an updated Estate Plan. In deciding how big a loan to actually take, you’ll want to look at the house’s total cost, not just the monthly payment. Did you know that your employer can help contribute to your home purchase?
During this portion of the sale you will likely finalize your home loan and purchase agreement, and submit the down payment for the home. There may be additional costs at this time, such as administrative fees, inspection costs or title transfer fees. Once you close the property, the previous owners typically have a move out timeline before you get the keys to your first home. Before submitting your offer, take another look at your budget. Home buyers may skip an inspection to save money and time up-front while creating an attractive offer for the seller.
I’m a first time home buyer in Pennsylvania, where do I start?
First-time home buyers sometimes have access to special loan programs and home buying grants that other buyers don’t. However, these types of programs are often geared toward first-time home buyers who need a little extra help; for instance, lower-income home buyers or those with poor credit. If you have great credit and make a lot of money, the benefits of being a first-time home buyer might not apply to you — but then again, you might not need them. First-time home buyer grants are often available at the state or local level. These are typically known as down payment assistance programs, which can help cover all or part of your down payment and closing costs.
And buying a new house and moving in costs way more than a simple down payment. Therefore, the more you save, the easier buying your first house will be. A millennial looking to buy a house should start with cutting expenses and saving. This is why millennials should first work toward paying off their outstanding debts, whether it’s student loans, credit card debt, or automotive loans.
How would you rate your credit?
But some first-time home buyer programs do impose maximum income caps. To qualify for a zero-down USDA loan, for example, your income can’t exceed 15 percent above the local median. Similarly, many down payment assistance grants set caps based on the local median income.
If you already have your money saved and have a good idea of the neighborhoods and type of home you want, the process will probably take you two to six months. Ask a local real estate agent for a more accurate timeline based on your local market conditions. To get a first-time home buyer grant, you’ll have to look for programs where you live. These grants are typically offered by state and local governments and nonprofits, so they vary by area. To qualify, you generally need to be a first-time home buyer with low-to-moderate income. You’ll also need to make sure the mortgage program you’re applying for allows you to use the funds toward your down payment and/or closing costs.
I'm a First Time Home Buyer, Where Do I Start?
Saving early allows you to contribute more money overall, and can earn you more with interest from savings accounts. You’ll need cash up-front to cover your down payment and closing costs at least. Deferred mortgages are available for up to $25,0000 via municipal governments and local foundations. They’re frequently limited to first-time buyers whose income falls below area averages and whose credit history shows a record of on-time payments.
It’s helpful to know what you want ahead of time, refine your home search, and guide your real estate agent. If you’re not sure what your dream home looks like, touring properties can help you set those expectations. A mortgage pre-approval shows you how much home you qualify for. The best time to get a pre-approval is before you start house hunting.
Some good habits to maintain a healthy credit score include paying your debts well in time. For millennials buying homes, not letting debts exceed 25% of your credit limit, is recommended. Buying your first home is a big commitment, so it is also important to consider your personal goals before getting started. Ask yourself where you want to live and put roots down, and how long you see yourself there.
You can view a complete list of state-specific buying resources on the HUD website. Government-backed loans can allow you to get a home with a low down payment or poor credit. The government insures government-backed loans, meaning they pose less of a risk to a lender.
HomeReady and HomePossible mortgages offer low down payments (starting at 3%) and flexible eligibility guidelines — especially for lower-income home buyers. This is also a good time to evaluate your finances and build a monthly budget. A specific budget allows you to see how much you want to pay on a monthly mortgage. It also helps you set savings goals for your down payment and closing costs, unless you choose 100 percent financing. When you finally find your ideal first home, it’s time to submit an offer.
Here’s more on how to check your credit score and what number is best to buy a first home. A lender will check your score and report in order to estimate the odds that you will deliver your monthly payment, too. Homeownership is a journey that can start well before you ever consider pre-approval.
Conforming mortgages are often the best choice for home buyers with good credit scores and a down payment of at least 10%. This will calculate the maximum amount you can afford as a monthly payment. In addition to having a down payment, a first-time home buyer will need a decent credit score. This three-digit number is a numerical summary of your credit report, a detailed document outlining how well you’ve paid off past debts like for credit cards and college student loans. Buyer’s agents help you find homes, communicate with the seller, and negotiate the home sale.
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