7 Rules for First Time Home Buyers

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Most people grow up assuming when they are an adult and want to settle down, they will buy a home of their own. This sounds like a sensible plan, but when that time comes many first time home buyers are faced with doubts and fears. There are some questions you need to answer before you even begin to look for your first home.

1. Your credit worthiness is the deciding factor as to whether or not you can buy a home at all. Contact the three credit reporting agencies and obtain a copy of your credit records. If there are inaccuracies on your report, work to clear them up and increase your credit rating before you begin house shopping.
2. Once your credit score is good enough, contact mortgage lenders to determine the amount you could be approved for - called mortgage pre-approval. Having a pre-approved amount in hand gives you more credibility as a client with real estate agents.
3. Consult with several lenders before making a decision about which one you would like to work with. Consider loan closing times, servicing after the loan is closed, as well as interest rates. Shopping on rate alone will ensure you "get what you pay for." Make sure your mortgage will be accessible with a local community mortgage bank in case you have questions or issues later in life.
4. Decide on your target area before you begin looking at individual homes. Knowing whether a particular neighborhood is trending upward or downward gives you an indication about the value of your new home several years down the road. Circumstances change, and if you should need to sell your home, you want to know it is more likely to appreciate rather than depreciate in value.
5. Consider the additional costs which are added to the purchase price of any home. Closing costs and brokerage fees add up, and if the home requires repairs or updates, those costs need to be considered. Repairs and improvements can be handled with a mortgage option like the FHA 203k.
6. First time home buyers also must take into account their long term budget. Is your career solid so you can depend on your income over the course of the mortgage? Most lenders do not even consider lending to anyone with less than two years at their current job.
7. A final consideration for first time home buyers is having some wiggle room in their budget. Do not purchase a house that makes your budget too tight. Unexpected events can create a budget pinch, and without adequate savings to depend on, you could lose your home to foreclosure.

Once you have answered all these concerns positively, you can feel comfortable searching for and purchasing your first home.

As you get on the road to buying that first home, make sure you have the right road map. Download the "Get Mortgage Ready Kit" at the button below. The free guide walks you through the home buying process in greater detail. Get your copy today.

(7: Flickr user millicent_bystander)