Improving Your Chances as a First Time Home Buyer

Improving Your Chances as a First Time Home Buyer

It is estimated that between 2020 and 2022, 8.3 million and 9.2 million new home buyers will enter the mortgage market. Buying a home ranks high among people’s lifetime goals. However, the process can be nerve-wracking for first-time buyers.

Read on if you plan to buy a house soon. This article will give you a checklist of what you need and how to prepare your finances beforehand.

home buyer

Mortgage Tips

  • Get Your Finances in Order

The step towards homeownership is one that requires a lot of careful consideration and financial planning beforehand. This is because mortgages can last up to thirty years. As such, lenders only advance loans to individuals who can demonstrate that they can make the payments without issues.

Also, before receiving the mortgage loan, you may be required to put down a down payment of about 20%. Though there are lenders that accept a much lower down payment, putting a high down payment of up to 30% is advisable. By doing so, you will reduce the amount you will have to pay for monthly installments, which will lighten your load throughout the repayment period.

The process of getting finances in order involves:


Buying a house is a deliberate move. Once you make the decision, start saving for the down payment immediately. Raising a high amount may be challenging and take some time, but it will ease the process later on.

Check Your Credit Score and Improve It

Lenders will always look at your credit score to determine if you are creditworthy. You may be denied a  mortgage loan or charged high-interest rates if your score is low. Therefore, you should check your credit score and be sure it’s good and work towards improving it. This should begin months or a year before applying for a mortgage.

To improve your credit score, you will need to start making loan and utility payments on time. Also, work towards paying off outstanding credit card debts or reducing them significantly and do not take up new credit cards. Your credit score will get a boost from a low credit debt compared to your total credit limit.

  • What Are Your Down Payment Mortgage Options

It can be very challenging to raise the down payment. Fortunately, there are mortgage options that help alleviate this burden.

  • Conventional Mortgages- These require as little as a 3% down payment and are regulated by Freddie Mac and Fannie Mae, government-sponsored entities
  • FHA loans- These loans are insured by the Federal Housing Administration, and you can put down as little as 3.5%
  • VA loans- These are loans for veterans and their surviving partners guaranteed by the Department of Veteran Affairs and can even be approved without a down payment

Though these options allow low down payments, you will have to pay higher monthly payments. To reduce the amount required in installments, take up a mortgage with a 30 year repayment period.

  • Find Out Which State and Local Assistance Programs Are Available in Your Area

As a first-time homebuyer, you can lighten your load by taking advantage of local programs. Many states have programs to assist first-time home buyers. Some of the benefits included are:

  • Assistance with the down payment
  • Tax credits
  • Discounts on interest rates
  • Closing cost assistance

Be sure to inquire at your county and municipal offices for first-time homebuyers assistance programs.

  • Determine How Much You Can Afford

As you prepare to begin house shopping, determine how much you can afford without straining yourself during the repayment period. Factor in your monthly bills and incoming expenses such as education and leave some room for savings. Be clear on the price range you will be working with and the monthly installments you are looking to pay.

  • Seek Multiple Quotes

According to the Consumer Financial Protection Bureau, you can save up to $3,500 over the first five years by comparing mortgage rates from at least three lenders. Therefore, ensure that you seek multiple quotes and compare both interest rates and fees charged.

While at it, find out if lenders allow you to buy discount points that can help you enjoy lower interest rates.

  • Get Pre-Approved

Before you begin the process of choosing a house, ensure that you get a pre-approval from your preferred mortgage lender. This will give you a clear picture of how much the lender is willing to lend you. With this information, you can avoid the disappointment of identifying a suitable house only to find out later that the lender cannot advance the amount needed.

How to Get the Best Buying Experience

Buying a home is an excellent investment. However, if not done well, the process and mortgage repayments can be stressful. Prepare your finances and reduce outstanding debts before you make the step. If the pre-approval amount is higher than what you planned for, resist any temptations to spend more and stick to your plan.