The First Time Home Buyer’s Guide

If you have plans to purchase a home for the first time, you are going to need a lot of assistance. This is because, although there are many things to look forward to when buying a house, a lot goes into purchasing a property. To be a successful home buyer, you must get all the details right from start to finish. Keep reading this first-time home buyer guide if you want to know how to navigate the initial stages of the house purchasing process.

Checking Your Credit Score

One of the most essential numbers in every adult’s financial life is their credit score. The good news is that checking your credit score these days is quite simple. If you have plans to buy a house for the first time, it’s important for you to know your credit score. The reason for this is that your credit score will give you a rough idea of the kind of mortgage you are eligible for, as well as the applicable interest rates.

What Exactly is a Credit Score?

Credit scores are 3-digit numbers that range from 300 to 850. Basically, your credit score is the result reached after your credit file has been analyzed. This number is important because it tells lenders of your capability to repay a loan, as well as your credit risk potential. That is why it is recommended to frequently check your credit score, even if you don’t have any plans to apply for credit. As mentioned earlier, checking your credit score is not a complicated process. You just visit the website of your credit card issuer to check the score.

If you find that you have a credit score that is only considered bad or fair, that is a score of 669 or below, there are steps you can take to improve it. The first thing that you need to do is to get a copy of your credit report. If there are any errors contained in the report, you can dispute such errors in terms of the Fair Credit Reporting Act. Your credit report has details about your payment history, debts, and credit management. Apart from disputing errors, you can take other steps, such as settling due balances, paying off current debts, and leaving your accounts open.

How Much Money is Needed to Purchase a Home?

As stated by the St. Louis Federal Reserve, the median selling price of houses sold in the United States during the first quarter of 2020 was $327,100. But starter houses are generally cheaper. As per the National Association of Realtors, during the first quarter of 2020 in the United States metro areas, the price for a starter home was $233,400.

The Down Payment

The down payment is the amount of the selling price which you pay yourself. The rest of the selling price will be financed by your mortgage. That is why it’s necessary to start saving for the down payment the moment you start considering purchasing a new house. Most individuals save this money over several years. What’s important to note if you are buying a house for the first time is that the higher the down payment is, the lower the loan amount will be.

To ensure that you have enough funds when the time comes to get a mortgage, there are a number of things you can do. For example, you can save money by opening a savings account where you deposit a fixed amount each month. You can also save for the down payment by lowering your expenses, reducing your high-interest rate debt, skipping vacations, or you can even opt for down payment assistance.

Although there are a lot of steps involved in the home buying process, if you go to the right people for assistance, including real estate agents and mortgage brokers, the process will go quite smoothly. With proper assistance, it is possible to not only find your dream first-time home, you will also be moving into your new home in a matter of weeks or a few months.