Buying a house is one of the biggest financial commitments you’ll ever make, and for first-time home buyers, the journey can feel both exciting and overwhelming at the same time. If you’re wondering if you’re truly ready to take this step, you’re not alone. At Edge Mortgage, Inc. we are with our clients every step of the way. Even before you are ready to buy a home. We can help get you prepared. We are the best mortgage broker in Colorado, Wyoming, Ohio, and Nebraska. That’s why we created this checklist for first-time home buyers. We want to get you closer to the goal of buying your first home.
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Let’s dive into the ultimate checklist for first-time home buyers to help you evaluate if now is the right time to dive into homeownership. Feel free to contact us any time with questions!
Financial Readiness
The first step to determining if you’re ready to buy a house is looking at your finances. Here’s what to consider:
1. Do You Have Enough Saved for a Down Payment?
Most loan programs require a down payment. The only two that don’t are VA loans and USDA loans. The minimum down payment on an FHA loan is 3.5%. Conventional loans can start as low as 3% down. For first-time buyers, reaching the necessary down payment amount can feel daunting, but there are loan programs and down payment assistance options to consider. At Edge Mortgage, Inc., we can help you explore all the financing options to find one that best suits your needs.
2. Check Your Credit Score
Your credit score is crucial when applying for a mortgage, as it affects the interest rate you’ll qualify for. A higher credit score usually means a lower interest rate and/or mortgage insurance, which can save you thousands over the life of the loan. Before you apply, it’s a good idea to check your credit report and ensure everything is accurate. If needed, we can offer tips on improving your score, so you’re in the best position for loan approval. This is why we suggest starting as early as possible so we can help if there are any issues that need to be addressed.
3. Evaluate Your Debt-to-Income Ratio (DTI)
Your debt-to-income ratio (DTI) is another factor lenders look at when assessing your mortgage application. It’s a measure of how much of your monthly income goes toward debt payments. The range is usually between 43% and 55% depending on the loan program and how well qualified you are. If your DTI is too high, consider paying down debt before applying. Again, this is why we suggest starting as early as possible so we can help if there are any issues that need to be addressed.
4. Prepare for Closing Costs
Closing costs are fees due at the end of the mortgage process, and they generally range from 2-5% of the home’s purchase price. They cover things like loan origination fees, title insurance, home appraisals, and setting up your escrow account. Including these costs in your budget is essential, as they’re often overlooked by first-time buyers.
Understanding the True Cost of Homeownership
Buying a home is more than just the mortgage payment; there are other costs involved that are essential to consider in your checklist for first-time home buyers.
5. Monthly Expenses Beyond the Mortgage Payment
In addition to your monthly mortgage payment, homeownership includes property taxes, homeowners insurance, and, if applicable, private mortgage insurance (PMI). These costs can add up, so make sure your monthly budget comfortably covers all your expected expenses.
This is typically included in their monthly mortgage payment. Take a closer look at what costs are included in your monthly mortgage.
6. Maintenance and Repairs
Unlike renting, homeownership means you’re responsible for all maintenance and repairs. Experts suggest budgeting 1-2% of the home’s value annually for maintenance. That way you’re prepared for any unexpected repairs or improvements that may come up.
7. Utility Bills and Other Expenses
Owning a home typically means higher utility costs compared to renting. Factor in electricity, water, heating, and any other utilities specific to your property. If the home is part of a community with an HOA, don’t forget to budget for those monthly dues as well.
Stability and Lifestyle Readiness
Financial readiness is essential, but lifestyle and stability are equally important to consider in this checklist for first-time home buyers.
8. Evaluate Job and Income Stability
Buying a home is a long-term commitment, so having a stable income is crucial. Lenders look favorably on borrowers with steady employment and income. Think about whether your job or income is likely to change in the near future, and ensure your finances will support a mortgage payment even if unexpected changes come along.
9. Consider Your Long-Term Plans
Buying a home only makes sense if you plan to stay for at least a few years. Think about your goals and whether you see yourself living in the home for five years or more. If there’s a chance you might relocate soon, you may want to wait on buying.
10. Assess Your Lifestyle Needs
Think about the type of home and neighborhood you want to live in. Are you looking for a big yard or would you prefer low maintenance? Is proximity to work, schools, or public transportation important to you? Having a clear list of what you’re looking for will make your search easier and keep you focused on finding the right home.
Knowledge of the Home-Buying Process
Navigating the mortgage and home-buying process is easier when you know what to expect.
11. Get Pre-Approved for a Mortgage
Pre-approval not only helps you understand what you can afford, but it also shows sellers that you’re a serious buyer. It can give you an edge in a competitive market, especially as a first-time buyer. At Edge Mortgage, Inc., we guide our clients through the pre-approval process and make sure they’re fully prepared.
12. Understand Mortgage Options
Different mortgages work for different people. A first-time buyer might benefit from an FHA loan, which offers more flexibility with down payment and credit requirements, while others may prefer conventional loans, USDA loans, or VA loans. We’re here to help you navigate your options and choose the best fit for your situation.
13. Work with a Real Estate Agent
Having an experienced real estate agent by your side can make the home-buying process much smoother. They’ll help you find the right home, negotiate offers, and manage the paperwork to make sure everything runs smoothly from start to finish.
Emotional and Mental Readiness
Owning a home is rewarding, but it comes with responsibilities and challenges. Part of your checklist for first-time home buyers should be assessing your emotional readiness.
14. Prepare for the Stress of Buying
Buying a home can be stressful, especially when dealing with finances, paperwork, and decision-making. Are you ready to handle these pressures? Being mentally prepared can help you stay calm and focused throughout the process.
15. Commitment to Homeownership Responsibilities
Homeownership requires a commitment to maintaining your property, paying your mortgage, and managing unexpected issues. Assess whether you’re prepared for these responsibilities in the long term.
Edge Mortgage, Inc.: Your Guide to The Ultimate Checklist for First-Time Home Buyers
There’s a lot to think about before buying your first home, but this checklist for first-time home buyers is designed to help you evaluate your readiness. If you’re financially, emotionally, and practically prepared, homeownership can be a rewarding journey. At Edge Mortgage, Inc., we’re here to make the process as smooth as possible. From pre-approval to closing, we’re by your side to guide you through every step.
Ready to start your home-buying journey? Contact Edge Mortgage, Inc. today for a personalized consultation. Let’s explore your mortgage options and make your dream of owning a home a reality!
Read These 5-star reviews From Two of Our Many Happy Clients
“Keri did an amazing job helping us with our purchase. Not only was she very knowledgeable, she also kept an eye on the market to lock us in on the best deal. As we came closer to deadlines, she would do triple checks to see if anything had changed. We are definitely going to be using Edge when we make another purchase!
Update: We went to Keri for our Refi! She was able to get us a great deal and saved us hundreds on our monthly payments.” -Sophia
“Keri at Edge Mortgage was awesome! She was always free to answer my questions as a first-time home buyer and helped me stay clam when I was stressed about closing etc. She helped us through the whole process from just starting out to being there for final closing signing. Highly recommend!!” -Mel
START YOUR FIRST-TIME HOME BUYER JOURNEY TODAY
Edge Mortgage, Inc. is located in Johnstown, Colorado, and serves Ohio, Colorado, Wyoming, and Nebraska. We offer honest answers and a stress-free process and we have no hidden or extra fees, keeping more money in your pocket. We are your trusted mortgage broker and we are ready to serve you. Call us today at 970-744-0000.
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