7 STEPS EVERY FIRST TIME HOMEBUYER SHOULD TAKE
Being a first time home buyer can be overwhelming. Check out this 7-step guide on some of the best practices you should be doing before buying your first home.
Micaela Stanaland, Licensed Real Estate Salesperson
Howard Hanna | Rand Realty
February 2, 2022
If you're going to be financing your first home, your credit score can greatly effect the type of loan you qualify for. Generally speaking, the higher your credit score, the lower your interest rate will be. Lower interest rates on your loan directly correlates with a lower monthly mortgage payment (and who wouldn't want that?).
Everyone's credit score ranges from 300-850 points:
According to a 2021 VantageScore report, the average credit score in America is 697.
Don't beat yourself up if your credit score isn't where you would like to see it. Your Local Mortgage Lender will be able to review your credit score with you to see what is effecting your score the most. They'll help you strategize ways to pay off any debts that are carrying the most weight on your score.
“A low credit score can make it less likely that you would qualify for the most affordable rates and could even lead to rejection of your mortgage application. It’s still possible to be approved with a low credit score, but you may have to add a co-signer or reduce the overall amount you plan to borrow.” - Bruce McClary, spokesman for the National Foundation for Credit Counseling
Depending on where in the country (or world!) you choose to live, a mortgage could easily be your largest monthly expense. When it comes to setting a monthly budget for your home, remember to take into consideration:
28% of your gross monthly income is a good rule of thumb for setting a mortgage budget.
If you're financing your purchase, the lender/bank will ultimately set the max budget for you. However, knowing where you're comfortable financially is a crucial first step in buying a home.
Senior Loan Officer at Hudson United Mortgage
c: (845) 239-6565
A mortgage lender is the person/institution that will determine whether or not you qualify for a loan. Lenders have specific guidelines for loan qualifications, and take into consideration a borrower's (that's you!) Gross Income, Debt-to-Income Ratio, and Credit Score.
Your mortgage lender will be the person that writes your pre-approval. What you need for a pre-approval will vary depending on whether or not you're self employed, but will generally include:
Be sure to ask any lender you speak with (whether it's a bank or a broker!) about special programs they offer for first time home buyers.
Your real estate agent is going to be the one that guides you along your home purchase. They'll set you up on listing alerts, show you properties, negotiate your offer, and get you to the closing table!
It's never a bad idea to interview or talk with a few agents before hiring one. Some things to consider when hiring an agent (other than their personality!) are their communication skills, their locality (do they cover the area(s) you're looking in?), and their overall experience with home buyers. Don't be afraid to Google the agents you interview and take a look at their most recent reviews from past clients.
And an added bonus - in majority of home buying situations, you don't pay your real estate agent - the seller of the home you end up purchasing does! A great way to say "Thank You" to your agent is by leaving a review for them to share with potential future clients or giving their information to anyone you know that's looking to buy or sell.
Licensed Real Estate Salesperson
c: (845) 596-9414
You probably have an image in your head of what your next home will look like, which is great! But remember that not every home is going to check off every box.
By creating a list of three to four "must-haves" for your new place, you'll be able to focus better on what's really important in your next home and your agent will have a better idea of what you're looking for.
Remember, "must-have" is different than "want to have". If you have kids, is keeping them in the same school district important? If you have pets, do you need a yard? Do you need to be within a certain proximity to work?
Things like paint colors and flooring can be changed. If you're having a hard time narrowing down your must-have list, ask yourself how long you plan on living there. If it's five years or less, you're likely not going to be looking for your "dream home". If it's 10 years or more, focus on the potential of the property and if a house is something you can make into your dream home.
When you're starting to look for homes, it's unlikely you'll be buying the first house you see. Not saying "one and done" doesn't happen, but - according to the National Association of Realtors, the average homebuyer spent 8-weeks house hunting and saw an average of 9-homes.
Depending on the size of the neighborhood(s) you're looking in, this number can vary. If your desired neighborhood has only a few homes that come up for sale every so often - or what we call, "low inventory" - then you'll likely be looking longer than that.
Another important factor to keep in mind is who the market is currently favoring - buyers or sellers? If you're searching for a house in a "seller's market", that means the market is favoring the seller, not you, the buyer. A "seller's market" was the market that we saw in the majority of suburban areas through the early 2020's, and most homebuyers spent months and or even over a year looking for a home.
No matter the market, the most important thing to keep in mind during your search is patience. This will (quite literally) be the key to your new home. Set a timeframe and stay focused.
Saving the best for last - with your budget set, your trusted agent by your side, your "must-haves" narrowed down, and your timeframe in place - it's time to get out there and start looking at homes!
Sure, you've probably been scrolling through hundreds on your phone or laptop (looking at homes online will become a pastime even after you move into your new place) but now it's time to actually get out there with your agent and see some homes in person.
An insider tip: Drive by homes that you're interested in before you go to see them. Get a feel for the neighborhood and local amenities if you're looking in an area that you're not familiar with.
We're here to answer your questions about the home buying process. Always feel free to reach out to us at email@example.com for your real estate questions.
If you're ready to start your search, create your free account on our website, and download our app for the latest Real Estate in Rockland, Orange, Bergen and Westchester Counties.
P.S. - Don't forget to follow along our real estate (and travel!) adventures on our LinkedIn, Instagram, Facebook, and Pinterest accounts.
DO STAY CURRENT ON YOUR EXISTING ACCOUNTS!
One 30-day notice could cost you, and may mean the difference in the type of loan you qualify for.
DO CONTINUE TO USE YOUR CREDIT AS NORMAL
Changing your typical spending habits could raise a red flag and lower your credit score. Use your credit lines as you normally would.
DO CALL YOUR MORTGAGE PROFESSIONAL
Before making any big changes, consult with your lender to make sure that it won’t put your loan in jeopardy.
DON’T APPLY FOR NEW CREDIT
This means buying a car or opening a new credit card. Every time you have your credit pulled by a potential creditor or lender, you can lose points from your credit score.
DON’T MAX OUT YOUR CREDIT CARDS
It’s good practice to keep your credit balances at 30% of their limit, or under. If you can pay off high credit card balances, do so.
DON’T CONSOLIDATE YOUR DEBT
You never want to be “maxed out” on your credit line. When you consolidate your debt onto one or two credit cards, you could be penalized.
DON’T CLOSE OUT YOUR CREDIT CARDS
Closing a credit card account means losing a line of credit, and this could make your debt ratio appear higher. Closing a card could also impact other factors that effect your credit score, such as account history.
DON’T PAY OFF COLLECTIONS OR “CHARGE -OFFS”
If you want to pay off old accounts, do it through escrow. Request a “letter of deletion” through the creditor.
Interested in finding out more about the loan process, and what you should and shouldn’t be doing when applying for a loan? Talk with Mike!
30 Year Fixed
15 Year Fixed
For general informational purposes only. Actual rates available to you will depend on many factors including lender, income, credit, location, and property value. Contact a mortgage broker to find out what programs are available to you.
Mortgage calculator estimates are provided by Howard Hanna Rand Realty and are intended for information use only. Your payments may be higher or lower and all loans are subject to credit approval.
MICAELA STANALAND | HOWARD HANNA | RAND REALTY
House hunting is no easy feat!
There are tons of factors that go into finding the perfect home. Many house hunters start the search for their next home by creating a criteria checklist with items such as number of bedrooms, square footage, amount of reno it needs, the size of the yard - the list truly goes on and on!
But what about starting your search with first finding the perfect neighborhood?
Here are 7 Tips on Finding Your Perfect Neighborhood:
Want to get a real sense of what a neighborhood is like? Go check it out at different times of the day and on different days of the week.
Midday on a weekday people are less likely to be home. This can make the neighborhood seem less quiet than it actually is.
On the flip side, try visiting the neighborhoods that you're scouting out during the weekend. This can give you an idea of how busy the neighborhood gets, and you may even have the opportunity to ask some neighbors about the area.
Bonus Tip: If you're considering moving into a condo development with unassigned or shared parking, visiting at different times of the day can also give you an idea of how easy/difficult it is to get a parking spot!
If your job requires you to head into the office or any location other than the cozy home office you may have made for yourself this past year and a half, make sure you check local drive times during your commuting hours.
In some areas, especially like where I live in the suburbs of NYC, the time of day you leave can make all the difference in how long it takes to get to work. Leaving at the wrong time and it could easily add an hour to your commute. Use our "drive time" search when in the Property Search page to check out your commute.
Rely on public transit? Ask your Realtor about commuter-friendly towns that have trains and/or bus stops close by.
If you have (or are planning on having!) school-aged kids, this is one you've probably already thought about.
There are a ton of websites that provide consumers with information on schools. You can see how certain school districts rank over others, find out staff qualifications, and even check out graduation rates for each district.
You may fall in love with a house, but what about the things to do around it? If you're an outdoor enthusiast, you'll probably want to be in a neighborhood close to local trails or parks. Have a dog? Find out where the closest dog park is. Into water sports? Research what bodies of water are nearby that you may not know about.
In newly developed neighborhoods, you can probably hit a grocery store within 10-minutes. But when you start venturing out to older towns or neighborhoods in more rural areas, the closest grocery store can easily be nearly twice that distance.
Think about how important being close to a main drag or center of town is for you and anyone you may be moving with. When you think you've found your neighborhood, do a Google search for the closest shops and restaurants and decide if it's within the proximity you'd like to be in for those amenities.
Typical in condo and townhouse developments or even new construction neighborhoods, you'll want to decide if you're ok with purchasing your next home in a development that has a Homeowners Association (or HOA) fee.
Sometimes these fees can be minimal, and go towards costs for things such as road maintenance or use of common areas. Other times, HOA fees can be hundreds if not thousands of extra dollars per month.
If you find a neighborhood you like that has an HOA attached, check to see what the fee covers and if it deduces any of the extra fees or responsibilities you would otherwise have as a homeowner.
This one seems a little obvious, but it's one that a lot of buyers forget to look at before they go to purchase their next home.
When you find a neighborhood you like, look at what the average home has sold for in the past year, and then ask your Realtor how much that value has increased or decreased from the years before. This is especially important if you're only planning on staying at your new place for a few years opposed to it being a "forever home".
Live in or thinking about moving to the Hudson Valley? Check out Joe Rand's 2021 Q3 State of the Market for NY here!