Services, Tips and Tricks Spotlight: First Time Buyers
Congratulations, you’ve decided to become a home owner for the first time! While the magnitude of that decision typically can set in before it even becomes a reality, there are so many services that exist to help alleviate that stresses that come with receiving your keys. From loan programs that allow you to put down less than 5%, to home repair tracking and more, we break down some need-to-know services for first timers out there.
Loans
Home mortgage products are always changing, but one constant is that there are a slew of creative offerings for first time home buyers. Did you know that multiple programs exist to service home buyers that have less than 10% down? The requirements to quality vary for each but it’s important to explore the difference programs that are out there to expand your purchase power. There are always a variety of other fees such as PMI (private mortgage insurance), “funding” fees, and more so it’s important to have your lender break down all of the costs and fees associated with each. A little extra home work in order to only put down 0-5%? Yes please!
FHA loans - Backed by the Federal Housing Administration, buyers can put down as little as 3.5% with a higher credit score.
VA Loans - 0% down for active or retired service member or spouse
USDA Loans - 0% down required for these loans specific to purchasing a home in rural areas. A minimum credit score around 640 is typically required.
Fannie Mae Conventional Loans - One of the more common programs, Fannie Mae isn’t backed by the government but rather traditional banks. 3% down available, but PMI is required for anything less than 20% down so you’d have to weigh if a lower down or a lower monthly is more important
Good Neighbor Next Door Program - Offering programs for teachers, firefighters, law enforcement, and ENT’s 50% off the purchase price of a home, with a credit score of 500 or more. You have to agree to live in US Department of Housing and Urban Development-approved revitalization areas for 36 consecutive months to receive the discount
Home improvement management
Home ownership is large responsibility to carry. Not only can the financial burden bring stress, but the necessary upkeep of a home can be challenging to track. Thankfully, some apps are aiming to lighten the load for home owners by assisting with organizing and accessing information and services for home upkeep.
Centriq is an app that allows you to access user manuals, install instructions, warranty information, parts details and any other detail you may need around an item that comes with your new home.
EasyHome is an organizational tool for home repair and upkeep. From a long to-do list on the heels of a home inspection report to the ongoing maintenance of a home, EasyHome provides a free customized home plan to help you track and connect with professionals to check things off your list
Homezada is a home inventory tracker that allows you store and track everything from home repairs, to home inventory for insurance, to financial metric tracking on your home.
Smarten up your home
The idea of a connected smart home has become a staple in our lives in recent years. From Alexa and Ring, the industry has now birthed an endless array of options. While we can’t possibly cover off all of them here, there are a few that will make you feel more in control of your home.
Smart Plugs like Wemo let you plug a single or multiple electronics into a smart device you can control from your phone. If you know you’re going to be out past dark or out for a couple of days, simply control from your phone to give the illusion your home isn’t vacant
Smart Thermostat - Beit Nest, Ecobee or another brand, controlling your thermostat in the moment or on scheduled programs allows you to keep your utility bills in your own control
Smart Water Leak Detector such as Moen can help protect you against water damage which can be an overwhelming problem to fix if not caught in time. From mold build to flooding, a detector can help ensure that you catch any issues early enough to repair
Getting Your Finances in Order
We recommend getting pre-approved when you start to get serious about house-hunting. By doing so, your lender should have tips, tricks and resources to help you increase your credit score and get your finances ready in the appropriate way. But here’s a few suggestions to explore:
Credit score monitoring - most banks and credit cards offer free monitoring of your credit to give you a sense of your score. Additional services from credit bureaus offer a free report as well.
Insurance - You’ll need home owners insurance. Typically you won’t need it until the end of the process and you can get it within a day. However if you want to shop, the best place to start is where you have your auto, renters, life or any other insurance policy to see if you can get a discount by having more services in one place. Oftentimes insurance agents (similar to some mortgage brokers) will have access to multiple companies to shop at once
Debt-to-income - Most lenders are looking for a debt to income ratio of 45% or lower. This means when you add up your monthly payments in your would-be mortgage payment, credit cards, cars, etc (basically anything in a credit report + child support, but not utilities, food, etc) and divide that into your GROSS income. So freeing up your obligations if possible, prior to getting approved can help increase your approval amount
Cash available for inspections, appraisal, etc - The buyer is responsible for paying for home inspections and appraisals in more states, so you’ll need to have cash on hand (or credit) to do this, separate of your donwpayment and closing costs. Typically you can expect this to be between $500 -$1000 for both.
If you made it this far, hopefully you’re feeling better equipped vs. overwhelmed. Buying home comes with a lot of responsibility, but thankfully we live in a time where there are resources and information out there to handle it, leaving you to love your home and relax knowing you can properly take care of your largest investment.