First Time Home Buyer Tips

Financing your new home

There are many critical factors involved in determining the best way to finance your home.

Determining the right price range

The first step in the buying process is to determine the price range that is right for you. You will need to consider how much cash you are willing to invest in your new home and how much money you will need to borrow. Use these mortgage calculators to help determine your price range.

Your cash on hand will have to cover the down-payment (if any) and any closing costs associated with the purchase. Closing costs will vary significantly based on the terms of the loan you obtain, but are generally 1% to 4% of the purchase price. There are also moving expenses to remember.

You should also take into consideration how much property taxes, insurance and HOA dues (if buying a condo) will cost in addition to your monthly mortgage payment in determing the right price range for you. Also remember that you will receive a significant tax break for your interest & tax payments. You can adjust you payroll deductions to take home more money each month.

Pre-approval for a loan

An offer to purchase a property must be accompanied by a pre-approval letter from a reputable lender or mortgage broker. This gives assurance to the seller that you will be able to obtain the proposed financing and will not tie up the property needlessly.

Potential lenders will inquire about six critical factors:

1. Income

2. Savings

3. Credit History

4. Debt Level

5. Employment History

6. The value of the property you wish to purchase

Very important note:

If you are serious about purchasing a home do not take out ANY new loans for ANY REASON prior to your pre-approval or during the escrow period. Any credit you take out during this time will increase your debt value and could disqualify you for a loan.