1. You Need a Large Down Payment When Buying Your First Home
Many home loans do not require any money down. The Veterans Home Loan is a 0% down mortgage. It is available to people who are currently in military service or for people who have served. The branches the VA loan covers are Army, Navy, Air Force, Marines, and the Coast Guard.
There is a program offered by the federal government called the USDA loan. USDA stands for The United States Department of Agriculture. The purpose of this loan is to encourage rural development. You do not have to put any money down, but it only applies to some geographical regions. The USDA website has an interactive map to find eligible locations.
Another option is an FHA mortgage. The Federal Housing Authority (FHA) will allow qualified buyers as little as 3.5% down payment. There are many loan products available, each having some restrictions or qualifications.
Grant money specific to your community or employment may be available. Some cities offer teachers or other professions grant money as an incentive for them to move to their town. Each district and state has various programs from time to time. Lenders may refer to these as down payment assistance programs.
2. You Need Stellar Credit to Buy a Home
Credit scores can range from the low end (300) to the very top (800) and these numbers can vary slightly from each credit bureau. A good score is 700 or greater. The FHA loan program allows for lower than average credit scores and is an option for homebuyers who have a credit score around 600.
3. You Should Wait for the Perfect Home
Looking for the perfect house is unrealistic. All properties have pros and cons. The trick is to know what you want before heading out to look at homes. What are the must-haves, and what would be nice to have? For instance, a must-have may be a certain school district, but having hardwood floors would be nice.
Here are some things to consider when creating your list:
- Centrally located or rural
- One story or multiple
- Number of bedrooms
- Number of bathrooms
- Garage and parking
- Low to no maintenance yard or acreage
4. A Single Family Home is the Best Option
When buying your first home, it is not necessary to limit yourself to traditional single-family homes. There are other types of housing to consider:
- Manufactured Homes
Single-family home loans cover four units or less, so duplexes all the way up to fourplexes qualify.
5. Once I’m pre-qualified for a dollar amount, I am ready to make a purchase
A pre-qualification means a lender has looked at your income and debt and made a reasonable assumption of what you can afford to pay. It is a good starting point, but you will need to become pre-approved.
A pre-approved buyer has given detailed financial documents, including taxes, to a lender. The lender will verify the information, employment, debts, and assets, and once verified, you will receive a pre-approval letter.
When a seller has to compare offers on their real estate, a pre-approved buyer represents a stronger offer than a buyer who is only pre-qualified.
The truth is that buying your first home does not have to be difficult. Planning and gathering information from mortgage professionals, real estate agents, and talking to other people who have gone through the process will help make this life event memorable.
Inspector USA offers a wide array of home inspection services to Central Kentucky and pest control services including Termite and WDI Inspections required for FHA/VA loans. Inspector Michael Green loves helping first-time homebuyers understand the systems of a home and how to maintain them in the future. Contact us to schedule an appointment for your inspection needs.