Buying the perfect home that ticks all the boxes can be challenging, especially for first-time homebuyers with little or no experience. Home buyers must meet many tasks, steps, and requirements. First-time homebuyers may also be anxious about making costly mistakes, stopping them from purchasing a home.
Artifact Homes provides a comprehensive home-buying process to demystify these anxieties and fears to get the most out of a first-home purchase.
Considering First-Time Homeownership
Owning a home is many people's dream, especially first-time buyers. However, to make the purchase a happy and satisfying experience, potential homeowners should ensure they're mentally and financially prepared for the accompanying responsibilities.
First-time homeownership entails mortgage, taxes, and home maintenance responsibilities. Preparing for homeownership requires buyers to take critical stock of their finances and expectations.
How to Prepare
Homeownership is about more than just decorating it how you like. It's about being financially and emotionally prepared to maintain it over the years. First-time homebuyers must know that part of their income and time will go towards regular maintenance and repairs. They must be willing to take the risks of homeownership with realistic expectations of its rewards.
Owning and maintaining a home can be a costly process. It can be discouraging to realize that your salary may not stretch as far as your desired home. However, sacrificing a significant portion of your salary to cover the mortgage can quickly turn the experience into a burden instead of a point of pride. As such, we encourage our first-time buyers to look for a modest home now and consider purchasing their "dream homes" in the future when they're financially capable.
The debt-to-income ratio (DTI) is another critical factor that lenders take very seriously. Lenders consider the borrower's DTI to determine if the borrower can afford to take on additional debt. Borrowers with high DTI may not get their loans approved or may not get the best interest rates on their loans. That's why the buyer's debt shouldn't be more than 43% of their income.
Get Financial Details Together
Homeownership is one of the most significant financial decisions, especially for first-time owners. Therefore, ensuring all finances are solid before starting the process is vital. That's why we advise our clients to talk to our team of experts for better insight into their budget by considering their income, debts, location, and down payments.
It's important to see how monthly mortgage payments can add up and how finances could look as a new homeowner. Doing this helps homeowners to keep their ambitions realistic and apply for a sizable mortgage without overspending.
Research First-Time Buyer Programs, Loans, and Mortgage Options
We advise homebuyers to refrain from being bound by loyalty to their current financial institutions when seeking pre-approval or looking for a mortgage. Take time to shop around for different options and offers. Loan fees can be surprisingly diverse.
For example, an FHA loan can have different rates depending on whether the borrower is applying for the loan through their local bank, mortgage banker, credit union, mortgage broker, or large bank. Mortgage interest rates also significantly impact the total price the buyer must pay for their home, which can also vary.
Therefore, it's vital to consider different loan options, buyer programs, and mortgage options before settling on a preferred lender and applying. The lender will verify the financial information provided (checking the buyer's credit scores, calculating DTI ratios, verifying employment information, etc.) before pre-approving the borrower for the loan.
It's also worth mentioning that getting pre-approved for a mortgage doesn't necessarily secure getting the financing for the loan until the process is complete. The loan could fall through at the last minute if there are alterations to the buyer's credit score, such as financing a car purchase.
