Congratulations, you’re ready to take your home search from casual Zillow scrolling to taking the first steps to buying a house! The process includes the excitement of spending your free time hitting open houses, learning how to navigate the buying process, and the reality that terms like mortgage rate, down payment, and equity now apply to you.
At Hopper Communities, we take pride in educating New Home Homebuyers on “how” to buy a home. Here are six tips to get you started.
While you typically won’t find special first time buyer mortgage rates, there are multiple options for lessening the initial shock of such a large purchase for first time home buyers.
Start by looking into programs that best fit your personal financial situation particularly in regard to finding out how much of a home you qualify for and what is needed for a down payment.
You could qualify for loans beyond a Conventional loan requiring 5% downpayment including a Federal Housing Administration (FHA) loan with a down payment of 3.5%, or, if you’ve served in the military, a Department of Veterans Affairs (VA) loan that offers the option to put 0% down.
And there are several programs within each loan type such as a 30 Year Fixed Rate, 2-1 Buy Down and 7 Year Adjustable. Each has its own benefits and it’s important to explore more than one to find your best fit.
Depending on the market, you may have to move quickly. Having your pre-approval letter at your fingertips will help you feel confident signing a Purchase Agreement and putting your dream home under contract. Your pre-approval letter will include the max amount you’re approved for with your lender based on your income, assets, credit, and debt.
If you need assistance connecting with a reputable Lender, Hopper Communities partners with 3 of Charlotte’s Top Lenders who provide FREE Loan Estimates, guidance on loan programs and answer any questions regarding home financing.
Your pre-approval letter will give you the amount that the bank has qualified you to purchase, but that doesn’t mean you have to meet that number. Look closely at your budget and decide what you feel comfortable paying.
Maybe you want to keep your monthly mortgage payment at the same amount you’re currently paying in rent or perhaps you can afford to take your monthly payment higher. Set your number and let that guide your search. You want to fall in love with a house that fits into your budget — and don’t forget property taxes, insurance, or other monthly expenses like HOA that might add to that number.
You likely know that you must save for a down payment, and, while the traditional down payment is often thought of as 20%, that’s simply not true as there are programs that require amounts as low as 3% – 5%. Keep in mind, as you drop below 20% down you may be required to purchase Private Mortgage Insurance (PMI) until you reach 20% in equity in your home.
However, there’s one more critical savings tip for new homeowners: don’t stop saving with the down payment. There are also closing costs to consider, usually 2-3% of the mortgage amount. These are fees associated with obtaining the mortgage and closing on the home. Do your research because sometimes a Seller is willing to contribute to these costs savings you thousands of dollars out of pocket!
Credit score for first time home buyers should be top of mind. Your FICO credit score, which could range from 300 to 850, will determine the type of loan you qualify for and the mortgage rate you’re quoted. Ideally, you’ll need a credit score above 650 to qualify for a loan, and over 720 to receive the best rates.
You can check your score for free annually using Experian, Equifax, and TransUnion. If you need to raise your score, don’t fret. You can pay down big debts and work on your debt-to-income (DTI) ratio. What’s DTI? Let’s discuss!
Your debt-to-income ratio is calculated by adding your monthly debt obligations and dividing them by your gross monthly income. You’ll need to get your debt-to-income ratio to 43 percent or lower to qualify for most loans. If your number exceeds 43, make a plan to whittle it down. Pay off your high-interest credit cards and personal loans, before turning to auto loans or even student loans.
We hope you feel confident and prepared about taking the next step in this exciting journey to buying your first home. If you’re ready and actively looking for beautiful move-in ready townhomes for purchase in the lively Charlotte, NC area we encourage you to contact us , or click here to view all available Hopper Communities homes at The Nolen , Loso Terraces , and Davidson Walk and learn about our current incentives.
We currently have a “Limited-Time Savings Event” happening now with contributions towards financing that gets you an interest rate into the 3%’s*! We look forward to the opportunity to help you make your dream home a reality!
* Terms & Conditions apply.