The Ultimate Checklist for First-Time Home Buyers

Buying a home is a dream for many people and more and more people are taking steps to make that dream a reality. However, for first-time home buyers the process from dream to holding those front door keys in your hand takes a great deal of time, preparation, legwork, and patience.

Working with a great real estate agent and mortgage broker can help the process go as smoothly as possible, but a great deal of the responsibility falls upon the buyer. You’ll need to produce pertinent documents, fill out mountains of paperwork, and attend meetings with numerous people.

While daunting, the process is designed to ensure that no boxes are left unchecked, and no receipt is left unnoticed. If you want to qualify for the best interest rate for the home you want, these are a few of the most important items that need to be on your first-time home buyer checklist to ensure everything goes as smoothly as possible.

Check Your Credit

You might already be browsing real estate agent’s listings, but the first place you need to start is by obtaining a copy of your credit score. Many people have items in their credit history that can negatively impact their ability to obtain a loan with a favourable interest rate.

Once you have a copy, study it carefully and ensure that any outstanding debt is actually yours. Unfortunately, many people become aware of identity theft when they go to make a big purchase like a home. Otherwise, any outstanding debt needs to be either fully paid off or in good standing before approaching a realtor and mortgage broker to determine the amount of your loan.

Ensure Your Income Is Sufficient

Mortgage calculators are a great way to determine what you can afford on your salary, but your mortgage payment is not the only fee that comes with homeownership. You’ll need to budget for mortgage insurance, homeowners insurance, home inspections, closing fees, and any housing association fees that might be required.

You don’t want your monthly salary to be devoted entirely to your home payments. Ensure that you can comfortably afford all of the fees associated with your mortgage payments and leave enough to start a savings account specifically for your home. You no longer have a landlord to take care of repairs, so keeping some money aside for the unexpected is a wise idea.

Have the Highest Down Payment You Can Afford

A minimum down payment is often sufficient to buy a home, but you’ll be saving yourself a great deal of money if you can deliver a large down payment at closing. Not only will this lower your monthly payment but it can also eliminate the need for pricey, private mortgage insurance, saving you thousands of dollars.

At least 20 per cent of the home’s price is ideal to avoid mortgage insurance and keep your payments low. This might sound like a great deal of money, but if you’re purchasing a $200,000 home, a down payment of $40,000 puts you in a prime position to get the best interest rates and avoid expensive mortgage insurance.

Take Advantage of Federal Programs

First-time home buyers have many advantages in the form of federal programs that can save you a great deal of money. The Federal Housing Administration offers attractive options for first-timers, as does the VA for active and retired members of the military and their spouses. The USDA offers programs for those who want to purchase homes in rural area.

Another little known plan is the HUD-funded Good Neighbor Next Door housing program. Reserved for members of law enforcement, emergency medical technicians, firefighters, and elementary school teachers, this program can save you a significant amount of money if you qualify, and you could even receive a discount on the price of the home if it’s located in a certain area.

Working with a top-notch real estate agent and mortgage broker is always going to be your best choice when navigating the unfamiliar territory of the real estate market. However, you are your best asset when it comes to ensuring that everything is in place before you even meet these people. Follow the checklist above very carefully to ensure that you do everything you can to ensure that you get the best house in your price range for the least amount of money.