Top Tips For First-Time Home Buyers. Get Helpful Advice Here.
Sorry we are experiencing system issues. Please try again.
Buying a house for the first time might seem like an unattainable goal as U.S. home prices soar and affordable homes are in short supply. With planning and discipline, though, that goal might not be as unreachable as you think.
First-time homebuyers who need to whip their finances into shape may have more success if they start planning early. Here are some smart money moves you can make today to get on track.
First-Time Home buyer Tips
- Step 1. Check Your Credit.
- Step 2. Determine A Budget.
- Step 3. Get Your Assets In Place.
- Step 4. Shop Multiple Lenders.
- Step 5. Hire Me As Your Real Estate Agent.
- Step 6. Put Contingencies In Writing.
- Step 7. Keep The Status Quo In Your Finances.
12+ months out
The first thing potential first-time homebuyers should do is pull their credit report and scores to see where they stand, says Ralph DiBugnara, president of Home Qualified Lending in New York City.
As you check your credit scores and reports, look for any errors or past-due accounts that might have gone to collections. These liabilities can create roadblocks when you apply for a home loan. If anything is amiss, contact the creditor to see if you can sort it out, DiBugnara says.
Use myBankrate to keep tabs on your credit for free. You can get a free copy of your credit report each year by visiting annualcreditreport.com.
Don’t just check one credit bureau’s report; you could get a false sense of confidence. Instead, get information from all three agencies, and keep periodic tabs on your activity, DiBugnara advises.
“If you’re not already signed up for a credit monitoring service, this is a good time to do it,” DiBugnara says. “You’ll get notified if your credit score changes, or if there’s suspicious activity on your report.”
6 to 8 months out
Determine a budget
When you’re buying a home for the first time, setting a budget is key, says Lauren Lindsay, director of financial planning with Personal Financial Advisers in Covington, Louisiana.
“Look at your monthly spending to see what you can afford for principal, interest, taxes and insurance,” says Lindsay. Factor in maintenance and emergency savings for repairs, too. “One lesson from the [housing] crash: Just because the bank approves you for a certain amount it doesn’t mean you can afford it.”
In addition to household expenses, consider other financial obligations that lenders won’t see on your credit report. Your cell phone, utility, daycare/tuition, grocery and car insurance bills are other fixed monthly expenses that factor into how much house you can afford.
Don’t max out your monthly income on mortgage payments and wind up house poor, or you might regret it later, says Steve Sivak, a certified financial planner and managing partner of Innovate Wealth in Pittsburgh. Don’t forget that home ownership comes with unforeseen expenses.