FAQ For Buying A Home First Time
Buying a home is the largest investment for most Americans, and thereby requires much thought, research and documentation before purchasing. First-time home buyers may not have experience with buying a home, but there are ways to make the experience a more pleasant one, if they remember to shop around and plan ahead for the purchase process.
Wh0 is Considered to be a First-time home buyer?
In order to be considered a first time home buyer you must not have had ownership in a home in the past 3 years.
Do I Need a Real Estate Agent?
Real estate agents can help you narrow your housing options. The U.S. Department of Housing and Urban Development recommends the use of a real estate agent. Make sure the agent works for you so the agent will be working for your interests. Your agent can take your criteria for a home, including cost, neighborhood, schools, home size and amenities, and match it with the Multiple Listing Service (MLS), which lists all of the homes for sale in a particular area. If you’re purchasing government housing, such as a HUD home, you must have an agent.
Do first time buyers need a down payment?
There are some programs that require no down payment, such as VA and USDA loans. However, these are not restricted to first time home buyers. There is no type of loan specifically for first time buyers that does not require a down payment.
Which loan is best for first time home buyers?
There is no one size fits all home loan for first time buyers. But the most popular type of home loan used by first time buyers are FHA loans. This is because of their low down payment requirement and most relaxed guidelines to qualify.
What credit score do I need for an FHA loan?
The Federal Housing Administration will insure a mortgage if the borrower has a 500 or higher credit score and a 10% down payment. If a borrower has at least a 580 credit score they will insure the loan with just a 3.5% down payment.
Can I Afford a Mortgage?
Before beginning the purchase process, make sure you can afford the home. Most lenders adhere to standards set by Fannie Mae, which buys and sells mortgages on the secondary market. Lenders want to see that your total monthly housing payment is no more than 28 percent of your gross monthly income, and that your total monthly debt payments are no more than 36 percent of your total gross monthly income.
How Do I Apply?
First-time home buyers should be prepared to turn in a great deal of documentation when they apply for a mortgage loan. we recommend that you gather all of these documents beforehand. You’ll need personal information, such as Social Security numbers and photo IDs. You must have proof you can afford the home, including bank statements for the past six months, a month’s worth of pay stubs and documentation of all other financial assets. You should also bring documentation on your current credit accounts, tax statements for the past two years and contact information for someone who will verify your employment.
What Happens at Closing?
Closing is when you sign all of the loan and ownership paperwork and take over the home. At closing you will be responsible for taking care of some costs, including title insurance and points to lower the interest rate on your mortgage, along with fees for loan origination, loan applications, appraisals, housing surveys and even your first month of homeowner’s insurance. These costs can be up to 8 percent of your purchase price.
Buying a home for the first time doesn’t have to be scary, follow these 10 tips and make sure you work with a great realtor and loan officer and the process should run smoothly.
Check your credit score, hire a good realtor, compare loan offers from multiple lenders and don’t apply for new credit during the home buying process. As long as you follow all the tips in the article above you can achieve the American dream without any headaches.