5 things to think about as a first-time home buyer (beyond your down payment)

5 things to think about as a first-time home buyer (beyond your down payment)

So, you’ve been saving for your first home, and you now have enough for a decent-sized down payment. That’s great news! The bigger the down payment you have, the better. However, just because you have a great down payment, doesn’t always guarantee you will be approved for a mortgage and there are a few other things to think about when it comes to making the leap from renting to owning. When you go to meet with a lender or a mortgage broker, they of course want to see that you have a down payment saved, but there is more beyond that you will need to take care of first. To help you get everything lined up ahead of your mortgage appointment these are 5 things to think of beforehand.

1. Your outstanding debt and credit score

One of the first things your mortgage broker or mortgage lender will discuss with you is any outstanding debt you may have and your current credit standing. Depending on the amount of your debt, it can make or break you getting approved for a mortgage. In some cases, it’s better to pay off or at least pay down some of your debt before meeting with your broker to discuss a new mortgage or a pre-approval. You will also need to look at your credit standing as potential lenders will review your credit score, and if it is lower than average, this will also impact your chances of getting approved for a low rate. A higher credit score isn’t always a deal breaker, it just means you might pay a much higher than average, interest rate. In some cases that might be ok, but in others, if you have the opportunity to pay down some debt and postpone your house purchase a few months it might mean saving a bundle in the long run. If you find you need to increase your credit score, talk to your bank or a financial advisor like myself about how you can fix it.

2. Stick to your budget

As you begin shopping for a house, it’s easy to fall in love with places that are a little bit out of your price range. That’s why it’s best to look only in a price range suited to your budget. There is the option of taking out a larger mortgage loan to increase your budget if your finances can support it and you’ll still pass the mortgage stress test but, remember to think long term. Ask yourself if it’s really that much better and if you’ll still love the place enough to have given up the extra cashflow 5 years from now. If you’re not sure what your budget should be you can always meet with a mortgage broker or lender ahead kick off that house hunt to see just how much you can get pre-approved for and then begin house shopping at that price range.

3. Ask the right questions

As a first-time homebuyer, be sure you are asking the right questions to the sellers. When you’re going to look at a house, don’t leave any stone unturned. Either speak to the homeowners themselves or their real estate agent and be sure to ask them important questions about the house such as any past leaks, floods, or other insurance claims on the house. Also, be sure that when you decide on the home you want to purchase that you get a home inspection done to ensure there aren’t any costly surprises before moving in.

4. Work with a real estate agent

Especially as a first-time homebuyer, there is a lot to navigate when it comes to buying a house. That is why I recommend working with a real estate agent when you begin looking for houses, and not try to fly solo on your first real estate purchase. An experienced realtor can help you find a home in your price range and can show you how to make your offer stand out if there are multiple bids on a house. They can also help you ask the right questions about the house and can show you locations that check off more boxes on your list you might have thought about, to begin with.

5. Don’t forget about closing costs

After you’ve put your offer in on the perfect house, be prepared for the closing process. There are a lot of steps between having your offer accepted and the move-in date. As you begin the closing process, ensure that you understand and read the paperwork with your real estate agent, and have them clarify anything you don’t understand. You’ll even want a real estate lawyer to review the paperwork to make sure you won’t be on the hook for issues you’re not quite savvy enough to understand the legal jargon around. The fewer surprises there are, the better. It’s important to make a detailed list of everything you need to do before becoming the legal owner of the house and to be prepared for the costs. Everything from the home inspection bill, and homeowner’s insurance to the credit report charges and land transfer taxes. Some if not most of these expenses will need to be paid beforehand so be sure to keep all of this in mind so you have the cash set aside, out of your down payment if your savings are lacking to kick in the extra.

As a first-time home buyer, there is a lot to keep in mind aside from having a large enough down payment. If you need help getting pre-approved for a mortgage and would like to learn more about what you need to know before you start shopping for your first home, you’ve come to the right place. I, Darren Robinson have years of experience as a mortgage broker and can show you how to get pre-approved for the mortgage you need and what to look for when shopping for a house too. I can also show you how to make the most of your finances so you can save more in interest long-term. So, when you’re ready to get started, give me a call at (705) 315-0516!

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