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First-time Homebuyers: Get Ready To Buy a Home

Before you start seriously shopping for a home, there’s some groundwork first-time homebuyers should do to put themselves in the best position to buy a home with the best interest rate possible. Get started a couple of months before you talk to a lender or before you start shopping for homes with your Berkshire Hathaway HomeServices network professional. 

Check and repair your credit  

Creditkarma.com explains that credit scores are 3-digit numbers compiled by either VantageScore or FICO based on information found in your credit reports from three consumer credit reporting bureaus, Equifax, Experian, and TransUnion. You can contact each bureau for a free copy of your credit report and FICO scores once a year, or order a VantageScore report from Equifax and TransUnion free from Creditkarma.  If you find a mistake or want to improve your score, work on it now. You’ll need at least two months before the credit score improves.  

Don’t accidentally raise your scores 

Lenders look at how much credit you’re using, your payment history, debt to income, and how much credit you have available, among other criteria. Don’t open any new accounts or close any existing accounts.  Don’t purchase furniture or a new car before buying a home. 

Find out about federal, state, and local government incentives 

You can get help with your loan rate, closing costs and/or down payments through federal and state housing authority programs. Rocketmortgage.com suggests visiting HUD.gov to learn about special home buying programs, such as The Good Neighbor Next Door, Section 8 Housing Choice Voucher Program and Section 184 Indian Home Loan Guarantee Program that may require no down payment or offer discounts. Also click on HUD’s Housing Authorities to find offers at your community’s level, such as tax incentives to revitalize a designated public improvement area.  

Get Loan Pre-approval

You have to know how much home you can buy. Share your financial information with the lender such as income and work history, student loans, child support or alimony, and credit card balances when you apply for a loan. Your lender will confirm your down payment source, interest rate, type of loan that’s best for your circumstances, and the terms of your loan. The lender will give you a loan commitment based on your qualifications. The home you select must meet appraisal, and the underwriting department must approve the loan. Ask for a preapproval letter, as it will help show sellers that you’re prepared to buy now. 

Narrow the choices    

Think about how you want to live. One story or two? Low-maintenance condo or big yard for the kids? New or older home? Drive through the neighborhoods you’re interested in and look at homes. Be sure to tell your Berkshire Hathaway HomeServices network professional what interests you most. Visit a few open houses in the neighborhoods but tell the seller’s agent that you already have a real estate professional.

Don’t expect perfection

There’s no perfect home. You may want all the latest amenities of a new home, but there will always be compromises – on price, size, style, or location. You’ll pay the most for homes that are updated and move-in ready, but homes that need work could be bargain diamonds in the rough. Ignore outdated fixtures and focus on the floorplan and dimensions. Cosmetic changes are relatively inexpensive, but if the home needs more, talk to your lender about a home improvement option. 

Think long-term investment

Buying a home can be a wise financial investment, if you buy right and hold your home for long-term gain. Over time, you’ll build equity and stability, but you’ll also have a home of your own, with no obligation to a landlord. Home is where you’ll collect your happiest memories, and that can be the best investment you ever make.