Are you a first-time homebuyer eager to pursue the American Dream of owning your own home? Buying your first home can be an overwhelming process, but the benefits of being a first-time homebuyer and finally achieving the American Dream of homeownership can make up for it.
1. Determine how much house they can afford
First, buyers need to figure out how much house they can afford. A person’s purchasing power depends on income, credit rating, monthly expenses, down payment and the current interest rate. Balancing personal and family goals with a sound financial strategy will result in the best first-time home-buying decision.
2. Shop for a loan
After you determine how much home you can buy, you need to shop for a loan. You should talk with several lenders and get written quotes, comparing costs, loan duration, interest rates and other financial terms. You should also ask the lenders for a pre-approval letter for a loan, which buyers need when submitting an offer.
Pre-approval demonstrates to sellers that you can afford the home and boosts your credibility and negotiating strength. Essentially, pre-approval means you have completed a loan application, had your credit checked and that a lender has approved your loan for a specific amount and interest rate. You can then present this document to a seller as proof that you can afford his or her property.
Most buyers will need a down payment. Most lenders insist that you put down 10 percent to 20 percent of the home’s purchase price before granting them a mortgage. So start saving now. Lenders also require that buyers secure homeowner’s insurance before they fund a loan. So contact several insurance agents and get a least three written quotes for homeowner’s insurance.