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.
Reach out to our experienced lending team today.