6 Tips for First-Time Homebuyers

Moshe Farber
17, Jan 2022

Purchasing a home can be both an exciting and overwhelming experience, especially for first-time homebuyers. When considering mortgage structures, the real estate market, budgeting considerations, lifestyle choices, and property prices, it can be difficult for first-time homebuyers to know where to start.

That’s why when buying a home, it’s helpful to break down the process into manageable steps. While considering all the variables of homebuying at once is enough to induce analysis paralysis, approaching the process one step at a time will make it achievable, straightforward, and even enjoyable.

Of course, it’s impossible to condense all the information you’ll need for finding and buying the home of your dreams into a short blog post without knowing all of the specifics of your needs and budget, but understanding the following 6 tips can help you get started.

To be sure, your loan officer or mortgage professional will be able to walk you through the entire process, but familiarizing yourself with these tips beforehand will provide you with a good understanding of what to expect and make the process feel less overwhelming.

Are you a first-time homebuyer who would like some help navigating the homebuying process? One of our loan officers will be glad to assist you. Astar Home Capital will get you approved for a mortgage loan quickly and easily. Reach out to an Astar loan officer today! info@astarteam.com or call 888-ASTAR-11 (888-278-2711)

  1. Calculate Your Household Expenses and Automate Your Monthly Savings

The first step to planning your future as a homeowner is to take an honest look at the present. You need to analyze your current household expenses and compare that with your monthly and yearly income. 

Once you’ve done that, you can calculate how much you can afford to save each month. However, saving is no easy task, so it’s best to introduce systems to automate the process. Speak to your bank, or use your mobile banking app to make a specific amount of your income get automatically placed into a savings account. 

When setting your savings goals, make sure to factor things like recreation into your budget for recreation. 

  1. Take Steps to Build Your Credit

Credit is an important factor in qualifying for home loans with low-interest rates and favorable terms. Your credit score is calculated by considering your borrowing history and how reliably you’ve paid back prior debts. Also considered is your credit utilization rate, which refers to how much of your available credit you are using to borrow and take out loans. 

Credit bureaus, who calculate credit scores, also look at what’s called your credit mix. This refers to the different types of loans and debts a consumer holds, which could include car loans, student loans, or credit cards. Borrowers who hold multiple kinds of loans responsibly can be considered more reliable. Finally, bureaus look at how much new credit you’ve taken on and how many hard pulls on your credit score have been performed.

An important part of automating your savings and building credit is to embrace responsible credit card use and get a handle on existing credit card debt. If you can afford it, set up your automatic payments for your credit card so that your full statement balance is paid each month. This will save you from paying the extremely high interest rates that most credit cards today charge. If you can’t afford to pay your full statement balance make sure to at least automate your minimum monthly payment.

If you are holding credit card debt that you can’t afford to pay off, consider pursuing a bank loan that you can use to pay off your credit card debt, and then automate your payment to the bank. It won’t directly affect your monthly budgeting, but it will allow you to dramatically reduce the amount of interest your debt accrues. 

In some cases, applying for a new credit card can also increase your score by making more credit available to you, thereby reducing your credit utilization rate. Try to apply only to credit cards that you’re reasonably sure you’ll be accepted for to reduce the number of soft pulls on your credit report. You can also consider credit cards with beneficial perks that might contribute to your savings goals. Avoid applying for too many credit cards at one time, since this can have the effect of lowering your credit score. 

  1. Decide What Kind of House Fits Your Budget

Deciding what house to buy is as much a lifestyle decision as it is a financial one. You should consider what sort of house fits best with your family, your work, and your daily routine. Also put careful consideration into the location of the house, the surrounding school district if you have children and the safety of the neighborhood.

While taking all of these factors into consideration, you should calculate the budget you will have available to spend on a home. To do this, you’ll have to analyze your current debts, savings, and liabilities. You’ll also have to consider your future projected income, taking into account the risk that it might decline or fluctuate.

  1. Get Prequalified or Preapproved for a Home Loan

In order to understand what kind of home truly fits within your budget, you’ll have to consider all of the costs associated with buying it. To this end, it can be helpful to get prequalified or preapproved for a home loan

This will give you clarity as to how much of a down payment you’ll have to make in order to buy a home at a given price. It will also give you a good idea of the interest rate you can expect to pay and the duration of your mortgage. 

Also important to consider are the additional costs outside of the home itself such as property insurance, maintenance, and closing costs. 

Getting preapproved for a home loan can also make you a more lucrative buyer for those wishing to sell you their home since they’ll have the peace of mind of knowing that you have the funding secured to make the purchase.

  1. Consider Possible Mortgage Structures And Negotiate With the Seller

There are many different ways to structure a mortgage, and it’s important to choose the option that best fits your budget and lifestyle. 

Conventional mortgages, FHA loans, USDA loans, and VA loans are all options you can consider when buying a home. 

When you’ve come up with a way to finance the purchase of a home, you can also consider negotiating with the seller to see if there is a possibility of buying the home for slightly less than the asking price. 

  1. Choose A Real Estate Agent Carefully

A good real estate agent can offer you valuable information on the real estate market in a particular area that will make you a more educated buyer. 

They can also help you find properties that suit your needs and facilitate the purchase of the property.

Before deciding to work with a real estate agent, you should take a careful look at their track record and experience to ensure they have the knowledge to guide your home-buying search. You can even get referrals from recent home buyers that have had a good experience with a certain real estate agent.

Buying your first home may seem like an overwhelming prospect, but it need not be. Following the 6 simple steps above will provide you with a good foundation so you can move through the home buying process with confidence and ease.

Reach out to an Astar loan officer today! Email info@astarteam.com or call 888-ASTAR-11 (888-278-2711) to start the loan application process. 

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