Must-Have Checklist for First-Time Home Buyers

By Right Start Mortgage
July 19, 2023

Ready to purchase your first home? Odds are you're feeling as excited as you are overwhelmed. But a must-have checklist can make all the difference in ensuring a smooth and successful buying experience.

From finding a realtor and strengthening your financial profile to eliminating debt and shopping for mortgages, here's the essential checklist you need to navigate your home-buying journey.

Find the Right Agent

Teaming up with an experienced, personable, and communicative real estate agent can make all the difference between a smooth and stressful experience. Begin by seeking agent referrals from your friends, family, or colleagues.

Next, explore online platforms for reviews and testimonials to gain further insights. And don't hesitate to ask your agent directly for references; it can provide valuable reassurance.

Set Your Budget

Always determine your budget before you begin shopping. Start by calculating your debt-to-income (DTI) ratio— your debt to monthly income ratio. If your DTI is greater than 43 percent, conventional lenders may view you as a higher risk for default and could be cautious about approving your loan.

As you work out your budget, keep in mind that in addition to making your monthly mortgage payments, you will also have to pay for private mortgage insurance, a down payment (generally 10 percent of the total cost of the home), and closing costs, which typically range from 3 to 6 percent of the loan amount.

Assess Your Financial Profile

You’ve determined what you can reasonably afford. Now it’s time to assess your credit and debt to strengthen your financial profile and impress lenders.

Credit: Most conventional lenders require credit scores of at least 620. However, you should have a credit score of at least 740 to secure a lower interest rate. If your credit needs improvement, review your credit history for inaccuracies, address collections accounts, make timely payments, and refrain from opening new accounts.

Debt: Paying down debt to improve your DTI is another proactive step that will help you increase your chances of qualifying for a mortgage. To eliminate debt, create a budget, trim non-essential purchases, consolidate high-interest debts, and continue to make timely payments.

Explore Mortgage Options

Your financial profile will largely determine your mortgage options. Here are a few of the most common ones:

Conventional: Conventional mortgages are ideal for first-time buyers with strong credit and stable financial history. These mortgages generally require a 10 percent down payment, require borrowers to carry private mortgage insurance, and offer fixed- and adjustable-rate options.

FHA: These mortgages are backed by the Federal Housing Administration (FHA) and are an attractive option for first-time buyers with less-than-perfect credit or higher debt-to-income ratios. FHA loans generally require a down payment of only 3.5 percent of the home’s purchase price.

VA: VA loans are available to qualifying active-duty service members and qualifying spouses and are guaranteed by the Department of Veterans Affairs. They are known for their zero down-payment options and competitive interest rates, making them an attractive option for qualifying borrowers.

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Contact the expert mortgage advisors at Right Start Mortgage for more information. Whether you’re looking to buy or refinance your home, we’re here to help. Get started today! Request a free personalized rate quote.

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