Guide to First-Time Home Buying

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Troy Reichert

Troy Reichert

Troy Reichert is the owner of Reichert Mortgage LLC. With over 20 years of serving the United States Airforce, Troy wants to continue to give back to the community by helping give people their best chance at securing a home.

Nothing is more exciting than buying a house for the first time. However, being a first-time home buyer in Colorado can be intimidating. In a market where cash offers and bidding wars have become the norm, where do first-time homebuyers fit in? 

The Colorado Springs housing market is challenging for any homebuyer. But if you’re looking for your first home, you probably have a lot of questions. Where should you start? Is now even a good time to buy? Market reports indicate that home values will continue to rise. If you’re not financially ready, however, it might be wise to continue saving and improving your credit score.

As a mortgage broker in Colorado Springs, The Reichert Mortgage Team can help you achieve your home-ownership dreams today! That’s why we’ve created this guide of things to do and not to do when purchasing your first home.

What To Know When Buying A House For The First Time

Many first-time home buyers delay because they’re worried about not having a large enough down payment. First-time home buyers’ assistance programs and government loans make it possible to secure a loan with a low down payment. However, saving up for buying your first home can make your offer more competitive and cut down on costs for things like mortgage insurance. Below you’ll find a list of first steps going beyond the down payment that you can take toward buying your dream home:

Save for a Down Payment

20% down payments are largely a thing of the past, but you’ll still want to save up for a number of reasons. Your down payment is one variable that lenders look at when determining the size of your loan.

Down payments under 20% will also make it necessary for you to purchase Private Mortgage Insurance or a Mortgage Insurance Premium. PMI or MIP are added to your monthly mortgage payment, so be sure to budget for that if you have a smaller down payment. You’ll want to start saving a couple of years before you’re looking to purchase a home. 

Examine Your Finances

Finances can change. However, for first-time homebuyers having a consistent budget will be very beneficial. It is essential to check your credit score as well. A loan officer may not be able to offer you a good rate or approve you for a loan if you have a bad credit score. 

When buying a house for the first time, you want to ensure that you are financially ready. Here are a few things lenders look for in first-time homebuyers: 

  • A steady income
  • Down payment
  • Good credit history 
  • Low debt-to-income ratio

Look for First-Time Homebuyer Assistance Programs

First-time homebuyers are eligible for several assistance programs that offer low-interest rates, closing cost assistance, and even down payment assistance. Some of them offer homebuyer education as part of their assistance programs, too. These programs not only put homeownership in reach for more first-time buyers but can also help you navigate the process confidently.

Examine Interest Rates

After reviewing your finances, find loan rates that work for you. There are many different types of loans with various rates, so it’s crucial to find a mortgage lender with your best interests in mind. Be sure to do your research on local companies, along with the various types of loans and rates that lenders have to offer. If you are a military member, consider applying for a VA loan.

Review the Loan Process

The steps of the loan process can be overwhelming. You need to research the loan process and prepare for each step. There is quality information about obtaining a first-time homebuyer loan available online. You can learn more about the Six Steps Of The Mortgage Process in one of our other blogs.

Talk to a Trusted Mortgage Lender

The easiest way to ensure you do things right as a first-time homebuyer is to find a trusted lender to confer with. An experienced lender will know so much more about the process and how to guarantee you the best possible rates and type of mortgage for your situation. In addition, a professional mortgage broker or lender can advise you on first-time homebuyer programs, down payment assistance, local programs, and credit counseling.

Get Pre-Approved for a Loan

One of the most critical steps of the loan process is to obtain pre-approval on your home loan. Pre-approval helps you determine a better price range for homes along with more accurate interest rates. Additionally, as a first-time home buyer, pre-approval shows buyers your commitment to buying a house, which informs sellers that you want to purchase, making your offer appear stronger.

Set a Budget

How much home you can afford is not always the same as the size of the loan you are approved for. After you examine your loan options and get pre-approved, take an honest look at your monthly budget. 

How much can you afford to pay on your mortgage and still meet your other financial obligations? Are you prepared for the maintenance costs that come with owning a home? Once you determine a reasonable budget for your situation, stick to it. Using a mortgage calculator is a great way to decide what home price range you should be looking in.

Decide What Type of Home is Right for You

You should have your finances in order by now, so you’re ready for the fun part! It’s time to start thinking about what you need and want in a home. Are you looking for a single-family home, or would you be interested in a condo or townhome? How many rooms and bathrooms do you need? 

Depending on your budget, you may need to compromise on some items, but you can also look for homes with the potential to be added on to or renovated over time.

Work with an Experienced Realtor

Especially as a first-time buyer, it’s important to hire an experienced realtor that can guide you through the process. In addition to having access to more listings and being able to monitor them frequently, real estate agents are experts in negotiation. They can help you make a competitive offer on the perfect home and ensure you don’t overpay.

What Happens After I Make an Offer?

Once you find a home that you love and make an offer, a couple of things have to happen before you can close:

Offer is Accepted or Counteroffer is Issued

Ideally, your offer will be accepted as is, and you can move on to the next step. In our current housing market, however, you will probably have to go back and forth a bit. The seller’s agent may come back with a counteroffer, or you may enter into a bidding process for the home. Even if you get caught in a bidding war, stick to your budget to avoid overextending yourself.

Home is Inspected

Once an offer is accepted, the home will be professionally inspected to make sure that there are no major issues that were not disclosed by the seller. If the home inspector finds any problems, you will have the opportunity to retract your offer. If you’re still interested in the home, you can also negotiate with the seller to have the problems fixed.

Close or Keep Shopping

If you’re able to reach an agreement with the seller or the inspection comes back clean, you’ll begin the closing process, where you’ll sign the final paperwork. This is also the stage where you’ll secure PMI or MIP if necessary, have the home appraised, and pay closing costs.

If you decide to rescind your offer or something falls through, you’ll start looking for another house to make an offer on. 

First-Time Homebuyer Mistakes

As a first-time homebuyer, you’re in new territory, and you may make some mistakes along the way. That’s okay! Having trusted advisors to guide you through the process can help you avoid mistakes that will affect you long-term. Here are a few things to look out for in your home-buying journey:

Last Minute Changes

While buying a home, consider factors that could change the outcome of getting a loan approved or closing the deal. Many first-time homebuyers do not realize the effects of seemingly ordinary practices. 

One thing to avoid is taking on new loans. The extra loans don’t look great to a lender, and it may be difficult to manage finances with multiple loans. 

Another thing not to change is your credit score. Especially if your loan has already been pre-approved, a different credit score reflects poorly on your financial literacy. Pay close attention to your finances during this time, ensuring you are still creditworthy to the lender.

Hesitation

Although it is essential to research the best option and get the best rates, there comes a time when first-time homebuyers should just commit. Once you have researched loan options and contacted a trusted lender, it is time to lock down on rates. 

While rates can change somewhat, constantly hesitating to purchase a home is not good practice for homebuyers. If you’ve followed all the right steps, you can feel confident about purchasing your new home!

Going Over Budget

When you fall in love with a home, it can be easy to overbid to try to get your offer accepted. Remember that there will be other homes you’ll love, and bidding more than you can afford will hurt you in the long run. A good realtor can help keep you on track and help you find other options if the home you’re interested in goes over your budget.

For Additional First Time HomeBuyer Information Vist The Following Posts

Get First Time Homebuyer Assistance and Loan Programs with the Reichert Mortgage Team

As you prepare to make one of your life’s most significant financial decisions, we want you to have a professional on your side. At The Reichert Mortgage Team, we become your partners in the mortgage process. As a broker in Colorado Springs, we offer several assistance and loan programs for first-time homebuyers, and we can help you narrow down the best set of options for your unique situation. We also offer free credit counseling services! 

The Reichert Mortgage Team is dedicated to ensuring that you understand what is going on and know your options. Our goal is to provide personalized mortgage solutions guaranteed to help you save money, time, and stress throughout your first home purchase. Contact us to talk with one of our qualified mortgage experts today!

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