How To Purchase Your First House: What To Know

Are you thinking about purchasing a house for the first time? If so, congratulations! Purchasing a house is an exciting milestone, and it is a great way for you to diversify your investments, build wealth, and put your family in a position for success moving forward. At the same time, purchasing a house is not an easy process, and there are a lot of steps you need to follow. That is why you need to reach out to a professional real estate agent, such as Mike Savage New Canaan-based, who can help you make sure all of your ducks are in a row before you move forward. What do you need to think about when you are purchasing a house for the first time?

Saving Up For the Down Payment

If you want to purchase a house for the first time, you must make sure that you save up enough money for your down payment. If you don’t have enough money to put down a suitable down payment, you will have a difficult time finding a lender who will work with you. There are different ways you can save up money for a down payment. They include:

  • Consider putting money into a separate account when you want to save money for a down payment. If you don’t see the money in your checking account, you will be less likely to spend it.
  • When you put money aside for a down payment, consider putting it in a high-yield savings account. That way, you can collect more interest, but you don’t have to worry about losing money in the stock market.
  • Have some idea of how much money you need to save. Even though you might need to adjust that amount as time goes on, you should always have a goal in mind.

As you are saving up money for a down payment on a house, there are other tasks you need to accomplish to make sure your finances are in order.

Check Your Credit Score in Advance

Your credit score is going to have a tremendous impact on your ability to qualify for a home loan. You should always check your credit score before you apply for a home loan. You are allowed to request at least one free copy of your credit report every year from the major credit bureaus. This includes Equifax, TransUnion, and Experian.

There are several reasons why you need to check your credit report before you apply for a loan. First, there might be inaccuracies in the report that might drag down your credit score. You need to get these inaccuracies corrected before you apply for a home loan. If you do not get these inaccuracies corrected, it can slow down the application process by making it harder for you to qualify for a home loan. Or, you might not get the loan terms you require. 

Second, you need to have some idea of what your credit score is. That way, when you apply for a home loan, you will have an idea of whether you can qualify for the best possible terms. Remember that there are steps you can take to increase your credit score. Paying down debt, paying your bills on time, and making sure you don’t carry a balance on your credit card can help you increase your credit score. 

Understand All of Your Loan Options

As a rule of thumb, people try to put down 20 percent for a house; however, this could be tens of thousands of dollars. It might take you a long time to save up this type of money, but there are ways for you to qualify for a home loan without putting 20 percent down.

For example, if you are a veteran, you may qualify for a loan from the VA for 0 percent down. Or, if you are purchasing property in a rural area, you may qualify for a USDA loan for 0 percent down. If you are purchasing a house for the first time, you may also qualify for an FHA loan. This is a program that may allow you to purchase a house for as little as 3.5 percent down.

These are a few programs that might give you the ability to purchase a house without putting 20 percent down. You need to talk to an experienced professional who can explain the differences between these options to you. 

Talk To Multiple Lenders About Those Options

As you are assessing your loan options, you need to talk to multiple lenders as well. Remember that lending is a competitive industry. Therefore, if you want to get the best interest rate possible, you should talk to multiple lenders. Interest rates can change significantly depending on the market, but they can also change depending on how competitive you are. For example, you might receive an offer from a lender that provides you with a 30-year fixed mortgage at five percent interest. But, if you take that offer to another lender, you might be able to get another lender to provide you with a mortgage at 4.5 percent interest. It can be a hassle to talk to multiple lenders, but you should get multiple offers on the table before you decide which one you want to take. 

Get an Inspection Before You Buy

Before you purchase a house, you should always get an inspection done. An inspection is important because it can reveal problems that might lurk underneath the surface. For example, you might not realize that there is a problem with the roof. Or, you might not realize that there is an issue with the hot water heater. You might even figure out that the HVAC unit has to be replaced.

Some of these repairs can be very expensive, and you need to make sure you have money put aside to cover them. Or, if the inspection reveals some serious issues, you might want to pull out of the deal entirely. Your real estate agent can point you in the right direction, helping you make the right decision for your needs.

In addition, if you decide you want to buy the house anyway, you may be able to get the seller to lower his or her price. This could be a way for you to save money on the cost of your house. You should always get an inspection before you decide to purchase a house.

Find the Right House To Meet Your Needs

Clearly, there are a lot of factors you need to consider when you are looking for your first house. It is important for you to find the right house to meet your needs, but it is also important for you to think about financing. This is a challenging process, and you need to work with a professional who will always advocate for your best interests. That is why you should reach out to a real estate agent or new home builder who can help you. A professional real estate agent has connections throughout the industry that he or she can use to make sure you are put in a position to succeed. Consider reaching out to a real estate agent who can help you with your next home purchase.