Tips for First-Time Buyers
Buying your first home is a big investment and can be intimidating or confusing at times. We’re here to listen and guide you through the process. In order to make you feel more confident about your decision, we have provided a list of tips that every future homeowner should consider when beginning the buying process.
Buying Your First Home
Check Your Credit
Your credit score is not the only factor in getting approved for a mortgage, but it is an important part of determining what you will be able to qualify for
- Check your credit score before meeting with a lender. It is important to make sure that your score is accurate when applying for a loan. You can get a free credit report once a year online by visiting annualcreditreport.com.
- Lets us help. We can check your credit score and also let you know about re-scoring your credit, if deemed appropriate.
- Verify your credit report for accurate information. Report and dispute inaccuracies with the credit bureau. Disputes in process may delay loan approval.
- Paying down high credit balances may positively affect your credit score, thus getting you approved with a better interest rate.
- Set up payment plans on any delinquent credit lines prior to applying for a loan. Call your creditors and work out a budget-friendly plan that won’t harshly affect your debt-to-income ratio.
Become Familiar With Mortgage Terminology
Understanding terms prior to meeting with a licensed loan officer can make the homebuying process easier to understand. Explore our Mortgage definitions so you become familiar with loan and mortgage terms.
When budgeting for a mortgage, remember to include all expenses, including:
- Monthly bills
- Estimated property taxes
- Estimated home-owner’s insurance
- Estimated private mortgage insurance
- Living costs
- Potential Homeowners Association fees
In addition to ongoing costs, remember to factor in one-time costs during the buying process, including closing costs and your down payment.
Calculate Your Debt-To-Income Ratio (DTI)
Traditionally, lenders will not qualify you for a mortgage unless your DTI is less than 45%. You can change your debt-to-income ratio by either increasing your monthly income, or decreasing the amount of debt you carry each month. Determine if there is any unnecessary credit carrying over each month that you can pay down.
Don’t Choose A Lender Based Solely On Rate — Find Someone Reputable And Trustworthy
When choosing a lender, find a reputable company that offers a wide variety of loan products and will work with you to get the best financing for your situation. To learn about Bank of England Mortgage history and leadership in the industry, visit our About Us section.
Once You’re Ready To Start Looking At Homes, Get Pre-Approved!
Understand the difference between pre-qualification and pre-approval.
- Pre-qualification determines your ability to repay a loan based on the information you provide.
- Pre-approval is a written commitment from a lender to extend a mortgage to you for a specific amount and time period. This involves an analysis of your financial status and credit history. With a pre-approval, you’ll be able to set your budget, negotiate confidently and close faster. Realtors and sellers will often take your offer more seriously if you get pre-approved prior to house shopping. It lets them know you are ready to make a deal.
Contact us today to discuss pre-approval with a licensed loan officer.
Choose A Real Estate Agent Carefully And Avoid Dual Agents
Make sure that you work with a real estate agent you can trust, that has a proven track record, and that has your best interests at heart. It’s useful to get referrals from family and friends who’ve been through the homebuying process. You’ll also want to avoid a dual agent. A dual agent is a real estate agent who represents both the buyer and seller in a transaction. This is often a conflict of interest since it’s possible that the agent will not negotiate in the buyer’s interest in order to increase the commission. If you do use a dual agent, make sure it’s someone you trust completely.
Interview Several Agents Before Choosing And Ask Them The Same Set Of Questions
You may consider asking:
- How long have you worked in real estate?
- Is this your full-time job?
- Have you sold homes in the area I am interested in before?
- How many sales in this area have you done?
- How many sales have you done in the last year?
- Will you be present for the closing of my loan?
Location Is Key
Consider the crime rate, public school ratings, your daily commute and local amenities when choosing a home. If public parks, libraries, pools, sporting arenas, churches, restaurants or shopping centers are important to you, make sure you consider their proximity to your neighborhood.
Don’t Make Financial Changes During The Loan Process
All aspects of your income and finances will be considered when applying for a loan. Don’t make any large purchases such as a car, appliances or furniture and don’t move untraceable money into or around your accounts. This includes changing employers during the home loan process. Steady employment will likely be a factor in determining what loan you qualify for.
Get A Home Inspection
Inspections are important to help you fully understand the condition of a home. They can also be helpful for negotiations to help drive prices down or have additional services stipulated in the contract.
Get All Details In Writing
During the sales process, a seller may make a variety of verbal guarantees. For example, the seller may promise to fix the roof before move-in or provide all of the kitchen appliances. Make sure this information is included in writing in any agreements you sign. If an agreement is not explicitly written in a contract, the seller is not obligated to abide by it. This also includes all of the details of your loan. Make sure the amount, payments, rate lock, and other details are clearly stated in writing in a signed document.