Mar 6, 2023

First Time Homebuyer? Here’s What You Need To Know.

Getting ready to purchase your first home is an exciting milestone, but the process can very quickly become overwhelming and challenging. A house is a very expensive commitment, and we understand you want to get everything right!

There are many different factors to consider when purchasing a home. Here are some tips we suggest to help navigate the process and make the most out of your first home buying experience.

Determine your budget: The first step to take before you start looking at homes, is to figure out how much you can realistically afford to spend. This will depend on a few factors, such as your debt-to-income ratio and credit score. It’s best to only use about 25% of your income on housing expenses. Idaho First Bank’s team of mortgage lenders are here to help you build a plan based on your specific situation and needs.

Save for a down payment: Look at your savings and ask yourself if you can comfortably afford any upfront costs (like your down payment and closing costs). Most lenders will require this. Make a plan and start the process of saving. There are a few different routes when choosing how to save. If your goal is 1-3 years, a CD (Certificate of Deposit) may be a good choice to lock your savings into for a short-term savings goal. If you are aiming for 6 months to a year, consider a high-yield savings account. Plan to spend between 3% to 20% of the homes purchase price on your down payment. The larger your down payment, the lower your monthly mortgage payments will be, as well as your chances of getting approved for a loan with favorable terms. The sooner you start saving for a down payment, the more options and flexibility you will have when it comes time to choose your home.

Know your credit score: Your credit score is an important factor in determining your eligibility for a loan and is one of the first things your lender will look at. A good history of paying your bills on time and your debt-to-income ratio can make the difference between an approval or denial.

Don’t take on new debt: Avoid taking on new debt, such as credit card balances or car loans, while you’re preparing to apply for a home loan. This can negatively affect your credit score and your chances of getting approved for a loan.

Ask questions: If you’re unsure about anything during the home loan application process, don’t hesitate to ask for clarification.

There are many resources and programs for first-time home buyers. Don’t be afraid to utilize these resources or ask your Idaho First Bank mortgage lender for more information. Buying your first home can be a long and complex process, but with the right preparation and guidance, it can be a smooth and rewarding experience.