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The Ultimate Financial Checklist for First-Time Home Buyers

The Ultimate Financial Checklist for First-Time Home Buyers

Buying a home is a complicated process, and many people get overwhelmed quickly by the sheer amount of information they need to get right. One of the most significant factors affecting your home buying options is your financial health. The better your finances are, the more competitive interest rates you’ll receive for your mortgage, and the more likely you will get approved for money-saving homeowner programs.

To help ensure you’re getting the best options possible, we’ve put together the essential things you need to get right when it comes to nailing down your finances to secure the best deal possible.

Get your finances in order

Before looking at new homes, you must first get your financial situation in order. Start improving your credit score so that it’s above 700 to ensure you’ll get the best mortgage rates possible.

To improve your score, you’ll need to pay down any outstanding debts quickly to move on to the next step as soon as possible, so use this loan repayment calculator to create a strategy for reducing your debt burden now. Having your finances strong is crucial before moving on to the next step. Otherwise, you could miss out on more competitive rates that save you thousands of dollars.

Start saving for a down payment

Your down payment will vary based on your lender and any federal programs you qualify for, but it’s a good rule of thumb to save as much as you can should you run out of options. Many federal assistance programs will require you to have as little as 3.5% down as long as you have good credit.

If you don’t qualify and your credit score is low, you may need as much as 30% down to get your mortgage approved. Remember that if you end up saving more than you need, that money can come in handy for all the little home costs that add up quickly, like moving, paint, utility deposits, and more.

You can save money in various ways, the most obvious one, of course, would be to set aside a portion of your monthly income and cut unnecessary expenses. You can also get a side hustle, there’re especially a lot of options for side gigs online. For example one of those options are money-making apps. To name a few it would be Honeygain, Swagbucks, Foap, JumpTask, etc. Overall, the Internet offers numerous ways to earn some money, you would need to do your research and find the most suitable side hustle option for you.

Research federal and state home-buyer programs

Before you look for a lender, you should research available options from the government that can help secure your chances of getting a loan. Federal and state governments may offer programs that guarantee your mortgage and reduce your down payment requirements, so it’s well worth the effort to research all available options.

Shop for a mortgage lender and get pre-approved

Once your financial situation is in order, it’s time to look for potential mortgage lenders and get pre-approved. When you’re pre-approved for a mortgage, you have a stronger chance of getting your offer accepted, especially when you’re in a competitive seller’s market.

Go house hunting and make an offer

Now that the tricky financial parts are over, it’s time to do the fun part and find your new home! Based on your pre-approval and federal program requirements, you may want to look for a real estate agent who specializes in the houses you’re qualified for. Many agents will have experience working with HUD properties or neighborhoods that are requirements for certain federal mortgage programs, so ask ahead of time before selecting your agent.

Do your due diligence and close on your new home

Now that you’ve found your potential home, it’s time to do your due diligence while in the window your contract allows. Have your house appraised and inspected so you know exactly what you’re dealing with and how many hidden costs you might’ve missed.

You should also invest in title insurance during this phase to know you’re not buying a home with other positions on its title. This is also the time to renegotiate with the seller to cover anything the appraiser or inspector finds. If you’re unable to come to an agreement, consider withdrawing your offer and moving on if the terms no longer have your financial interests at heart.

Once everything is settled, it’s time to come to the closing table. During this time, you’ll need your down payment, closing costs, loan documents, homeowners insurance policy, identification, and anything else your lender requires. The purchase price will then be wired over to your seller, and the home is now yours.

The bottom line

When you’re ready to house hunt, use this checklist to help ensure your finances are in order so that you receive the lowest interest rates and never have to pay more for home-buying essentials than necessary.

About Author

Dana Cull

Dana is a digital content creator with a self-confessed obsession with writing. She is also an avid reader and loves to spend her leisure hours watching documentary films from different directors across the world.