First Time Home Buyers Guide

Buying a home can be a nerve wracking process, if you don’t have all the right information. Many first time home buyers go into the process with no knowledge and get taken advantage of from every player in the process. This guide can help you become more knowledgeable about the process and make buying your first home a great experience.

Can I afford a home?

Although it may sound obvious, many people jump into buying their first home without even checking to see if they can afford a home. You will find all sorts of formulas online to see if you can afford a home and how much you can afford. Every formula you use will give you a completely different answer. The best way to find out if you can afford a home and how much you can afford is to: Add your total take home pay for the month, subtract all the bills you pay during the month, subtract all your other expenses for the month, the number that you are left with is what you can afford for a house payment. Remember: your utilities and insurance will likely increase when you purchase a home. Also, remember to keep some money for house repairs, and always put some portion of your income into a savings account.

Mortgage Pre-approval

After you find out what you can afford its time to get pre-approved for a mortgage. Only go to one bank to be pre-approved. In the end you do not have to go to that particular bank for the loan if you feel their rate is too high, but you do need a pre-approval. The pre-approval shows the realtor and the seller that you can afford the home and are serious about buying. When you go to get the pre-approval ask for it by name. Some banks try to give you a pre-qualification which sounds the same, but is not. For the pre-approval you will likely have to fill out a form with your salary and debt and they will also pull your credit report. The bank will send you a letter with the amount you are pre-approved for. Show this letter to your realtor. When you go to put in an offer on a house black out the amount you are pre-approved for when the letter goes to the seller. It gives them leverage you don’t want them to have!

What type of home is best for me?