Facebook
X
Pinterest
Copy Link
Tired of renting? Ready to buy? Anxious about it? Completely understandable, especially for the first-time homebuyer. Let me help you relieve some of that stress by offering a guide to what you need to do before you start looking for your first home.
First-Time Homebuyer Guide: Before You Start Looking
Save For Your Down Payment & Closing Costs
Your first step should obviously be to save up some money. If you want to qualify for the best interest rates and avoid Private Mortgage Insurance (PMI), you need to put at least 20% of the sale price down on your mortgage loan. However, many people don’t have that much saved up. Fortunately, many mortgage programs allow anywhere from 0% (for VA or USDA loans) to 10% down. Closing costs can add another 2% to 7% of the home’s sale price into the mix.
Check Your Credit Score
To qualify for the best interest rates (or qualify for a loan at all), you need to whip your credit into shape. First, check your credit score by visiting AnnualCreditReport.com. A Federal Trade Commission study found that one in five people found an error on at least one of their credit reports. If you find an error, visit the appropriate credit agency’s site (TransUnion, Equifax, or Experian) to find out how to dispute erroneous information. Each agency requires its own process to do this. This takes some time. So, the sooner you start, the better.
Get Pre-Approved For a Mortgage Loan
After your credit is in the best shape possible, talk to a lender. In fact, talk to a few. Different lenders offer different programs. When you decide on one, start the pre-approval process. Do not mix this up with pre-qualification. That takes a few minutes and only lightly touches on your finances. Pre-approval requires you to provide bank statements, paycheck stubs, and any other pertinent financial information. You also need to list your debts. Basically, it’s the starting point of the loan process and takes a bit of time. But it is well worth the effort. Once the lender analyzes this information, they A) tell you if you would be approved for a loan and B) tell you how much you would be approved for. That helps you narrow your focus when you search for a property. Plus, sellers like to see a pre-approval letter included with your offer. Just remember that a pre-approval is not an actual approval.
Hire a Real Estate Agent
Some people think this should land higher on the list. While an important step, it helps to get started on the other steps first because they may take a bit of time. Finding the right real estate agent is important, especially for a first-time home buyer. Specifically, you need a buyer’s agent. They listen to the features you want in your Inland Empire home and then they search for homes fitting your requirements in their extensive database. Then, when you find the right property, they negotiate on your behalf to get you the best deal possible. As a bonus, their fees are actually paid by the seller at closing.
When you are ready to start your search for your very first Inland Empire home, contact me. And if you need advice on how to get started on any of the other steps to owning your first home, I’m always happy to help.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
