Do’s and Don’ts for the First Time Homebuyer

So you’re thinking of buying your first home. In that case, there’s plenty to do. And plenty not to do. Check out this handy list of dos and don’ts that can help make your first step towards owning a home is a smooth and painless one.


Do: Get pre-approved for a home loan mortgage

By getting pre-approved, you’ll be better prepared to find a home and have a stronger position during negotiations. Being pre-approved means you’ll be able to focus on homes for sale in your price range. Plus, you’ll be more aware of your overall financial capacity, and more likely to put an offer on a home that fits your lifestyle and your means.

Do: Choose a reputable lender

A good lender will help you secure the best overall mortgage—one that’s tailored to your specific financial and life goals. Some lenders specialize in specific types of loan programs. Ask your loan officer what their area of expertise is. It’s also helpful to find out whether the processing and underwriting is done in-house or if it’s sent somewhere else. Lenders that provide in-house processing and underwriting are in a better position to meet deadlines and acheive service level goals as the various departments are working together to deliver your loan product.

Do: The math

Your monthly housing costs should be gauged against your income. Keep your total housing payment equal to or lower than 50% of your monthly gross income.


Don’t: Get tripped up on low-interest rates

Lenders know that rookie homebuyers can be lured by low interest rates. Some lenders take advantage of this by offering low rates only to add higher backend fees. Remember: lower interest rates can be a good thing, but if you don’t plan on staying in your home for 20-30 years, fees you pay to get them may offset the perceived benefit of the lower rate.

Don’t: Fall for your first

Resist the temptation to make an offer on the first home you like. Shop around and take your time before committing to one of the biggest financial relationships of your life. Also, take time to become an expert in the area you’re looking. Get to know the home values in the neighborhoods you are considering and ask your Realtor for the sales price of homes that have recently sold in those areas.

Don’t: Forget about closing costs

Closing costs include expenses like title and settlement fees, taxes and origination, plus prepaid items like homeowner’s insurance or homeowner’s association fees

A pre-approval may also provide you with some important information that could impact some of your home buying goals. You will be able to review your estimated payment as well as the required monies needed at closing. You will also be able to review your credit score which can impact the interest rate you will be able to get. If you are not purchasing a new home soon, there may be some time to improve your credit score. Lastly, and maybe most importantly, you will have the knowledge of the steps involved throughout the purchase process.