First Time Buyers

Are you a first time home buyer?

Home Ownership is a big decision that requires careful thought from anyone - especially for a first time buyer. If you are a first time buyer, here are some indicators that can clarify if the timing is right for you to buy your first home:

You are budgeting your income and expenses

Home Ownership requires multiple different fixed monthly payments including your mortgage, taxes, insurance, and any homeowner dues. Additionally, it will require maintenance costs that can vary from month to month. A solid budget will ensure that all these costs are being accounted and planned for.

You have a down payment

Traditionally, lenders have asked for a 20% down payment on a loan. While the percentage you will need to put down varies from one lender to another, it is wise to have at least 5%-10% of the price of the homes in your price range. Additionally, you will want to be sure to have another $5,000-$10,000 saved to pay for your closing costs.

You have a reliable source of income

When buying a home, it is important that you have an income that you can count on coming in each month. In fact, most lenders will require that you show proof that you have been receiving reliable income for a period of 2 years or more!

You have money in a savings fund (that you won’t be using for a down payment!)

Storing money for a “rainy day” is important when you are a home owner. There are times when a maintenance issue may arise on your home and the only option is to turn to that savings account. Additionally, in the event of a job loss or illness, you will want to be sure that you have enough money stored away to pay your mortgage.

You have your debts under control

Applying for a loan is not just about how much you can afford, or how much of a down payment you can make, it also takes into account how much debt you have. The amount of debt you have is compared to the amount of income you bring in and is used in determining how much you can spend on your home. It is suggested that first time buyers try to be as debt free as possible.

Your credit is in good shape

Credit is a huge factor when trying to obtain a loan. Your credit is directly tied to how much you will qualify for and what kind of mortgage rate you will get. Generally, the lower the credit score, the higher the interest rate, which then raises the monthly mortgage payment. If your credit score is too low, you may be given ways to get it back in shape and asked to apply for the loan after you have done that.

If you have looked at these items and realized that you fit all of these criteria, the time to buy your first home could be very near!


Dyanna Chrisman, REALTOR,
brokered by Real Smart Realty

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