No matter whether you are aiming to settle down, buy property to create generational wealth, or simply want to invest your money in something that you could possibly sell before retirement.

Homeownership is a powerful thing, and you need to play your cards right to get the most out of your loan commitment. Even when you have your lender’s preapproval, these home-buying and mortgage tips can help you make the entire undertaking less stressful. 

In the meantime, if you are looking for other ways to finally have your own home or to give back to the community, you can always apply for Habitat for Humanity.

So, here are our tips for first-time homebuyers.

  1. Evaluate whether you’re Ready for a Loan Commitment

With the average loan term for a mortgage being between 15 and 30 years, you first need to be sure that you’re absolutely ready for it. Even if you don’t need to stay that amount of time in the actual home, you will still need to make sure that you are ready to undertake the responsibilities that come with homeownership. 

  • Are you ready to live in the same home/city for the upcoming five years? 
  • Do you have an emergency fund that can help you tackle emergency expenses for at least three months?
  • Is your income stable? 

Even if you are preapproved, and your lender’s financial analysis of your current situation is more than satisfactory, if your answer to any of these questions is a “no”, you might be better off waiting for a little.

  1. The Importance of Preapproval

Printed Document With Rubber Stamp and the Word Pre-approved.

When it comes to mortgage tips, having a preapproval is probably the most important thing we can highlight. Sure, it can be tempting to look for the perfect home right after you’ve decided to buy one, but don’t jump into it without preapproval.

This is a document from your lender that tells you the exact amount of money you can get for home-buying purposes. It’s basically a financial analysis based on your general financial info, credit card score, and bank statements.

Being preapproved means:

  • That you know your budget and its limits.
  • That you can make stronger offers
  • There are no delays and surprises with your lender and mortgage.
  1. Don’t Forget Your Down Payments

First of all, look into ways that will help you manage your monthly down payments with ease. Make your own personal financial analysis, save up some money before pulling a trigger on a home, start a lucrative side job, eliminate unnecessary expenses, and so on.

On the other hand, there are several down payment loans and grants available for first-time homebuyers, and it makes sense to see what you qualify for.

  1. Stick to the Budget

When it comes to tips for first-time homebuyers, this is among the most important. As a first-timer, you can get carried away a bit and look for options that are way over their budget.  Sure, it’s easy to find something that enables you to express your freedom and sophisticated taste, but if you end up paying too much, you won’t have any leftover money for renovations and repairs. Find an option that’s within your budget and has all the necessary must-haves you’ve established beforehand.

  1. Maintain Your Credit

Before a loan commitment, avoid opening a new line of credit. Lenders will check your credit reports prior to preapproval and once you close on a house.

If they see that you have another credit line or loan and an increased credit balance, they might deny you before giving their final approval.

That being said, avoid risky spending and being late with your bills, payments, and so on. Keep being consistent to earn your lenders’ trust

  1. Understand the Terms of a Loan Commitment

You can get several types of mortgage loans, and experts will give different tips for first-time homebuyers depending on the loan option they prefer the most. 

Generally speaking, the loan you opt for will determine the type of house you will be able to buy, the down payment amount, and more. 

That being said, here are only some of your options:

  • Conventional loans
  • FHA loans
  • VA loans
  • USDA loans

Apart from these, you can (and should) research other loan options as well. Remember that each of them will have different qualification standards.

  1. List Your Needs

Before jumping into the hunt, you should first establish a list of non-negotiables, must-haves, and nice-to-haves.

Even before getting preapproved, think about your reasons for buying a home. If you are out to make an investment, expert tips for first-time homebuyers often suggest buying a duplex. 

If you want to settle down and start a family, it might be a great idea to look for a larger house with more bedrooms.

Also, you can also begin to make a list of the must-have features that will meet your needs. 

Take your time and make a list of everything you want and need in your house. This will help you when it comes to comparing properties and might even help you with establishing your budget.

  1. Take Proper Care of Your Paperwork

No matter whether you are looking for practical tips for first-time homebuyers or more specific mortgage tips, experts will always tell you to keep a close eye on your documents. Always make sure to keep physical copies of everything, from mortgage statements, closing Disclosures, and more.

Keep them in a secure place and only let a few people you trust know where and how to access the documents in case of an emergency.

  1. Don’t forget, there will be Closing Costs

Portrait of Married Couple Budgeting Redecorations Cost While Sitting at Table in Empty Room

Apart from your down payment, unfortunately, there will be additional costs as well. Before actually being able to take control of the property you’ve bought, you will need to take care of closing costs as well.

These are the expenses that will go to the lender who arranged specific loan services. They can include:

  • Attorney fees
  • Appraisal fees
  • Escrow Fees
  • Title insurance costs
  • Discount points
  • Pest inspection costs

These expenses will be visible to you on the Closing Disclosure document, which typically amounts to 2% to 5% of the total loan costs.

Again, if you are a first-time buyer, there are government-backed financial options that may help you deal with closing costs, and you may also leverage seller concessions to cover things like attorney fees or appraisal costs.

Take Your Time

First-time homebuyers often get overwhelmed by the sheer amount of paperwork and approval processes they may have to go through in order to buy a home. Sure, there are a lot of obstacles before you can grab your house keys, but the undertaking doesn’t have to be daunting when you know where to start. Buying a home is a huge decision, and it’s always a great idea to research your options. Study the market, learn about loans, and most importantly, see what your options are.

On that end, Habitat for Humanity might be able to help you with finding your best options.