We could fill a book with what first-time home buyers need to know. To save you time, we filled this blog instead.
What do first-time home buyers need to know? Well, a lot. Luckily, we’ve made it easy with eight important things to know before you start your homeownership journey. And remember, you don’t have to do it alone. This blog is just one of the ways we’re here to help.
What First-Time Home Buyers Need to Know: 8 Important Starting Points
- Your credit score
- Your loan options
- Your priorities: Location vs. space
- Your down payment
- Your real estate agent
- Your school district
- Your timeline
- Your budget
1. Your Credit Score
A key factor that every first-time home buyer needs to know (or any home buyer, for that matter) is their credit score. If you don’t know yours, open up a new tab, and do some research on what goes into a credit score, what affects it, and how to obtain it before you read any further. Your credit score can make or break your chances of getting a mortgage depending on how high or low it is, but there are ways to improve it if you find your score needs some work. While there’s no set credit score that you need to buy a home, it’s better to be safe than sorry.
Pro Tip: Start strengthening your credit score with these seven strategies.
2. Your Loan Options
Once you know your credit score, you should have a much better idea of which loan options are available to you. Most lenders will have a general overview of their loan products on their website with a target credit score. But depending on whom you choose, there could be some wiggle room there. Don’t stop at skimming through a website, though. If you’re serious about buying a house, get in touch with a loan originator and find out where you stand.
Loan Options that First-Time Home Buyers Need to Know
- Attainable housing solutions: These loans are designed to make homeownership accessible to more people with lower costs all around.
- FHA loans: This mortgage type offers flexible down payment and credit requirements, making it a popular choice for first-time buyers.
- Unique home financing: Housing as we know it has changed, and so have Cardinal Financial’s loan products. We can help finance unconventional home types like tiny houses, container homes, barndominiums, and more.
Pro Tip: A free pre-approval can give you a highly accurate estimate of how much home you can afford. Plus, it’ll help you make a more competitive offer to your seller.
3. Your Priorities: Location vs. Space
As a first-time home buyer, there are a lot of options and factors you’ll have to weigh. Two of the most important are location and space. Depending on where you are in life, you may have different priorities where it concerns these two factors. If you’re single, you may want to prioritize location above everything else. If you’re moving with a family, space might be more important than being in a happening part of town. It’s important to have clear priorities so you don’t give up too much of what you’re looking for throughout the house-hunting process.
4. Your Down Payment
A substantial down payment goes a long way in minimizing risk and getting you started off on the right foot with some equity. Make sure to start saving as soon as possible to make a sizable dent in your total home cost. But, don’t let down payments keep you from committing to homeownership. It’s a commonly held belief that you need to put 20% down, but that’s simply not true. In addition to down payment assistance programs for first-time home buyers, some loans even allow 0% down.
5. Your Real Estate Agent
If it’s your first time buying a home, you’re going to want some help. A great real estate agent can take a lot of pressure off you and really help streamline the process. Find someone who comes highly recommended, either from a friend, family member, neighbor, or co-worker, and let them work for you. The right agent should be experienced, skilled, motivated, and knowledgeable about the area in which you want to buy.
6. Your School District
If you have kids or plan to in the near future, it’s important to explore the schools in the vicinity of any home you plan to buy. Are the schools a good fit for you and your family? Do you have other options if the school you’re zoned for isn’t a great fit? Even if you don’t have kids, school districts can impact the cost of homes in the area. Often, thriving school districts indicate a healthy local economy and higher real estate value.
7. Your Timeline
One of the most important things first-time home buyers need to know is something only you can determine: When are you ready to buy a house? It’s a huge commitment that shouldn’t be taken lightly. Before you buy a home, make sure you know exactly what you’re getting into so you can decide if you’re ready from a financial and personal standpoint. Find out how much you’ll be paying in addition to your monthly mortgage payment. That includes property taxes, homeowners insurance, HOA fees, and other monthly costs. Once you have all that settled, you’ll be in a good position to decide if you’re ready or not.
8. Your Budget
Budgets aren’t fun, but they are necessary. Look for properties that cost less than the amount you were approved for initially. Even though you can technically afford your pre-approval amount, you should use that as a ceiling. That’s because it doesn’t account for the monthly expenses we listed earlier or any other repair costs that may arise during homeownership.
Home shopping with a firm budget in mind will also help you when it comes time to start making offers. In a competitive market, it can be tempting to make a high-priced offer on a home you love. But it’s important not to let your emotions get the best of you. Shopping under your pre-approval amount will allow for some wiggle room for bidding and will help you avoid a mortgage payment you can’t afford.
What First-Time Home Buyers Need to Know: Additional Resources
You don’t have to be a mortgage expert to buy your first home. After all, that’s our job. Our team members are available anytime to answer your questions. We also have a variety of free guides available to help you dive deeper into topics like down payments, property taxes, and more.
