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11 Tips for Buying a Home Loan for the First Time

Home ownership is the dream of most Americans and provides many great benefits, from stability and freedom to rewards and tax savings. But whatever the reason, buying a home can feel overwhelming for many first-time homebuyers. So, here are the best tips for first time home buyer loans to ensure your experience is smooth and hassle free.

1. Make sure you are ready to commit

Unlike renting, owning a home is a long-term commitment, and you can’t just move out. Most mortgages come in 15 or 30 year terms. So it’s important to ask yourself three important questions before starting your search:

  • Do I want to live in the area for the next five years?
  • Do I have an emergency fund that covers at least three months of expenses?
  • Is my job and income stable?

If the answer is yes, now might be the right time to make your dream of owning a home a reality.

2. Get Pre-Approved

The best time to get a mortgage pre-approval is before you start looking. This step is especially important for first time home buyers. Mortgage pre-approval provides you with valuable information about your loan. In addition, identify potential problems and challenges as well as appropriate solutions.

Keep in mind that there is a difference between prequalification and pre-approval. Pre-qualification estimates how much you can afford but is not a guarantee. While a pre-approval is an official document that tells you how much you can afford and the terms of the particular loan.

With pre-approval in hand:

  • You know exactly how much you can afford.
  • You have greater negotiating power with the seller.
  • The mortgage process goes more smoothly, and you’re less likely to run into last-minute surprises.

Be sure to look for a lender who understands not only the mortgage industry but what the experience is like for a first-time home buyer. This is an excellent choice when looking for a Vermont home loan.

3. Attend a First Time Home Buyer Class

Next, you want to attend a first-time home buyer class. These classes are often a requirement for state and local first-time homebuyer assistance programs. Your lender can provide you with a list of online and in-person classes. First time home buyer classes prepare you for home ownership and help you avoid costly mistakes.

4. Maintain Your Credit

Now is not the time to open a new line of credit or get a new credit card. Lenders want to see that your credit history is stable and predictable and don’t like surprises. Also, any change in your credit status may invalidate your pre-approval letter.

5. Advances

There is a common misconception about how much you should save for a down payment, and the amount will vary by type of mortgage. However, you may be eligible for a down payment or grant as a first-time home buyer.

Your lender will use the official definition of a first-time home buyer, as outlined by the Department of Housing and Urban Development, to determine your status.

During the pre-approval process, your lender will review all of your options and check to see if you qualify for a state or local cash advance assistance program.

6. What is the Closing Fee?

In addition to a down payment, there are other expenses when buying a house. Known as closing fees, these are fees for various loan services arranged by your lender.

Typical closing costs include:

  • Attorney fee
  • Title insurance and escrow fees
  • Appraisal fee
  • Discount points (if any)
  • Homeowners insurance and property taxes

Expect to pay around 2-3% of the home’s selling price as closing costs. The statement of completion provided at closing outlines all costs associated with the purchase of a home. As an eligible first-time home buyer, you may be eligible for assistance with closing costs. In addition, it is customary to require the seller to pay some or all of these costs.

7. Know the Difference Between Want and Need

Having a clear idea of ​​what you want versus what you need is very important when you start looking at a house. Make sure that the home will cater to any plans you may have, such as raising children or having room for your pets. However, your first home may not have everything you want. But remember that you are building equity for the future.

8. Don’t Go Alone

Your lender can recommend a professional Realtor who is experienced in assisting first time home buyers and who will manage the process from start to finish. Your agent will show you a home that meets your needs and fits your budget. Moreover, they will handle all the paperwork and attend the closing to make sure everything is in order before you sign the paperwork.

9. Stick to Your Budget

It’s easy to start looking for a home outside of your budget, but this only causes stress and frustration. Be patient – ​​the perfect home for your budget is out there. Don’t let your emotions control you.

10. Hire a Home Inspector

A home inspection is different from an appraisal. The appraisal determines the value of the home and whether it meets minimum property standards. A home inspection takes a deeper look to identify if there are any specific problems with the home.

Your purchase contract will provide a time frame for you to carry out a home inspection. If a problem arises, you can ask the seller to fix it or cancel the contract without penalty.

If allowed, try to be present during the home inspection. That way, the inspector can answer any specific questions or concerns you may have.

11. Keep Calm

Above all, stay calm. It is expected that situations arise during the home buying process. If something happens, take a deep breath and remember that you have a team of professionals working for you every step of the way. Before you know it, you’ll be walking through the front door of your new home.


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