Mortgage rates are crazy low right now, which means you can either get more house for your money or have a lower mortgage than you had thought. Either way, these historically low rates might just be the push many prospective home buyers need to get them to stop thinking about buying a home and actually doing so.
For those making their first entry into homeownership, we have some first time home buyer tips:
Get your financials in order
Your credit score is one of the primary factors that determine if you get approved for a mortgage and if you get that low, low-interest rate. There are several online sites that offer a free credit score report. Some credit card companies and banks also provide current credit scores.
If you don’t already have a budget, create one and determine how much home you can afford. Ideally, lenders want your mortgage payment to be about 28 percent of your monthly gross income, with total debt payments at or below 40 percent of your gross income.
Finally, you’ll want to get a pre-approval letter, which tells the builder you are serious about buying a home and eases the process later on. You’ll need documents such as tax returns (usually two years’ worth), bank statements and a list of your monthly debt payments (car loans, credit cards, etc.). Renters will want to show payments for the past 12 months and provide contact information for landlords from the past two years. If a friend or relative is helping with a down payment, it’s good to have a letter stating that you won’t have to pay back the gift.
Time to go home shopping – almost
You are ready to start shopping for a home, but before you start taking virtual tours of models or visiting in person, you have a little bit more work to do.
Decide where you want to live.
Do you want to live close to work? Is a school district important? It may not be right now, but if you’re planning on having children and staying in your home a while, you’ll want highly rated schools. Even if you’re not planning on children, being located within a sought-after school district will help resale. Especially popular are communities with on-site schools, like Santa Rita Ranch which has two on-site schools — Santa Rita Ranch Elementary and Divine Savior Academy private school.
Once you know where you want to live, it’s time to start researching builders and seeing what type of floor plans they offer. Large master-planned communities like Santa Rita Ranch have numerous builders — we have 12 — that will offer a greater variety of floor plans. First-time buyers will have more to choose from in larger communities. Make sure to have a general idea of what you want in a home to help you narrow your search.
Hire a real estate agent
The person who really can explain what to know when buying your first home is a real estate agent. Realtors can not only help you navigate the often complicated process of buying a home, but they will have a depth of knowledge about area schools, nearby retail and restaurants, builders and comparable home sales for the area. Realtors do work on commission, but their services are well worth it.
Avoid the biggest first-time buyer mistake
You’ve thought about how much home you can afford, have saved for your down payment, picked your community, found the perfect home and you’re ready to sign. Just one more thing to consider — do you have enough money for closing costs? These fees can run between 2 and 5 percent of your loan amount. Luckily, many new-home builders often have incentives that can help reduce closing costs.
Another expense that many first-time homebuyers forget is move-in expenses. You might need money for appliances, for new furniture, for an outdoor grill (especially if you’ve been living in an apartment) and other items. Think about how much you might need and start saving.
You’re prepared — now enjoy!
Yes, buying a home — especially your first home — can be a daunting experience. But with proper planning, you’ll be up to the challenge. So, enjoy your search, touring model homes and deciding what your perfect first home might look like. If you decide to buy new (and there are many reasons to do so), you’ll be assigned a construction manager who will guide you through the construction process. Or, if you’re ready to jump into homeownership now, most builders have an array of inventory homes ready now. You can search move-in ready homes in Santa Rita Ranch here.