Is This the Right Time to Buy My First Home?
There are many factors that you must consider as you contemplate buying your first home. While you may understand the basics of a mortgage loan and the effects it will have on your budget, there are other costs you must be prepared for, as well. These include the up-front costs associated with buying a home, as well as ongoing expenses such as repairs, home improvements, and utility bills.
Once you take all of the costs associated with homeownership into account and arrive at a realistic monthly budget, carefully consider whether you can afford the loan payments for the type of home you’d like to purchase. If not, you may want to wait a year or two while you work to increase your savings and your income and reduce your spending and cut your debts. You'll want to make sure that, when the time comes, you are able to afford the house you want
and apply for your first mortgage with confidence
What Can I Afford?
First, make a comprehensive list of your monthly expenses, excluding your current rent. Then, add in major costs that occur only once or twice a year, such as insurance premiums, holiday and birthday gifts, and vacations. Once you subtract that total from your monthly take-home income, you’ll have a good idea of what you can afford in monthly mortgage payments.
It is important that you limit your house hunting to homes that fall within your price range. Otherwise, you could find yourself wanting a home that you cannot afford. As a first-time homebuyer, the exact amount and terms of the mortgage for which you will qualify will depend on such factors as your income, credit, debt, and size of down payment you are able to make. The Bank of Internet USA mortgage calculator is a valuable resource to help you better understand the mortgage options available to you.
How Do I Find the Right Home Loan?
Applying online for a home loan will set the mortgage pre-approval process into motion. so you know exactly how much you would be qualified to borrow. Once you obtain mortgage pre-approval, you will have a solid idea of how much you will be able to borrow via a home loan, which will allow you to shop for a home with greater confidence.
As a first-time homebuyer, you have a variety of mortgage options open to you. Our team of Mortgage Consultants will work with you to find the loan option that best serves your unique needs and goals as a first-time homebuyer. We understand that your ideal mortgage may be very different from that of another person looking to buy his or her first home. For example, you may be planning to stay in your first home for just a few years, in which case we may recommend that you take advantage of a fixed-period Adjustable Rate Mortgage (ARM). Alternatively, you or your spouse may be a qualifying veteran who is eligible for a VA loan, which requires no down payment whatsoever.
At Bank of Internet USA, popular mortgage options among first-time homebuyers include:
- Conforming Loans: These mortgages, also known as Conventional Loans, conform to the the guidelines established by the government-sponsored enterprises Fannie Mae and Freddie Mac and are generally for amounts of $417,000 or less for single-family homes in most U.S. counties.
- Government Loans: Government-insured mortgages such as FHA and VA loans offer flexible terms and low monthly payments for qualifying applicants. FHA loans require low down payments while VA loans require no down payment at all.
- Interest-Only Mortgage: Each month, for a fixed period, borrowers who take out Interest-Only Mortgages can decide whether they make a payment on the principal and the interest on the loan or the interest only.
- Jumbo Loans: Jumbo Loans exceed the loan amount limits for Conforming Loans and can reach up to $5 million or even more under certain circumstances. Bank of Internet USA specializes in Million Dollar Home Loans for qualifying homebuyers.
- Home Loans for Foreign Nationals: We are pleased to work with nonresident aliens looking to buy their first homes in the United States.
How Do I Choose the Right Home?
Once you’re ready to find your first home, the old adage "location, location, location" will come into play. Consider the distance to work and other places to which you frequently travel; if you have children, also consider the proximity to and the quality of local schools. You'll want to enlist the assistance of an experienced real estate agent who knows the area extremely well and clearly has your best interests at heart. (If you're wondering why a real estate agent might not always have your best interests at heart, please read our page devoted to Common Mistakes of First-Time Homebuyers.)
How Can I Be Sure My Home Is in Good Condition before I Move In?
Inspecting the new home for repairs, mold, plumbing issues, and other potential problems is essential to protecting yourself from unknown expenses after you close on the home. Ask to be present during the inspection and be prepared to learn a good deal - not all of it positive - about your new home. If the inspector finds a major problem, bring it up with your real estate agent and discuss options as to how you can proceed. You will probably want the seller to repair the problem before you move in, or at least deduct the cost of the repair from the sale price.
How Do I Make an Offer on the Home?
Once you find the house you want, work with your agent to move quickly in making your bid. Look at the selling price of at least three homes that have recently sold in the neighborhood, then decide with your real estate agent on the best amount to offer the seller. If you’re considering making an offer on the low end of the spectrum, you will likely be at the mercy of the market. If the local market is slow, you may have some leverage; however, if the local market is hot, your offer may never be considered. A good agent will advise you appropriately, and we at Bank of Internet USA will be happy to partner with you throughout every stage of the mortgage process.