Smart Moves for First-Time Home Buyers

First-time home buyers, are you ready to buy? It is a seller’s market right now so we are here to prepare you with tips before entering the market. Your biggest challenge is that you are probably bringing less cash to the table, which makes it harder to compete with more season buyers. What YOU do have is flexibility-you’re not counting on selling your current place to fund the deal. Which means that you are a perfect answer for sellers who want to stay put until they land their next place.

1. Lock up your financials. It is time to clean up your credit and save for a bigger down payment so that you’ll qualify for a better mortgage rate and avoid costly fees. Start paying down credit cards so your balance is less than 30% of the limit and avoid late payments. It is so important to pay your bills on time, even student loan payments. Student loans will not hinder your chance of getting a loan, as long as you are making the payments on time. Next, 20% is the golden number for down payments. Putting down 20% helps you avoid costly private mortgage insurance and can help you to beat competing offers. If you aren’t there yet, either change your spending habits to save up more or start looking at cheaper homes.
2. Check Alternative Mortgage Options. If you can’t get close to that 20% down payment or your credit score is not where you would like it to be, that is okay too! FHA loans (read more about them here) let you put just 3.5% down, and offer better rates for those with less-than-pristine credit. It is important to know the tradeoff though, for a 30-year FHA loan, for instance, you’ll pay an extra 1.75% of the purchase price in upfront mortgage insurance, plus at least 0.8% in annual insurance for the life of the loan.
3. Get Pre-Approved. Here at First Ohio Home Finance, our dedicated Loans Officers are determined to help you get pre-approved. This will give you quite the edge in the buying process. Being pre-approved for the loans is the best way to show to sellers that you are serious and can make this happen in a timely manner.
4. Make Unsolicited Offers. To avoid going head to head with experienced buyers, look for homes not yet on the market. Look at rental ads or bookmark listings that may seem overpriced then check back. The average seller drops their price after six weeks of being on the market without any offers.
5. Play up your flexibility. This is where you can shine above more experienced buyers is your ability to delay move-in, so take full advantage. Whether is it a longer closing window or an option to rent back, see what the sellers are looking for and go from there.

First-time buyers, this is an exciting time for you and First Ohio Home Finance is here to help every step of the way.