The Boise Real Estate market is presenting a great opportunity to first-time home buyers. With home values at six year lows and mortgage rates at record lows its no wonder that more and more people are looking to become First-Time Home Buyers. It really is a great time to be buying your first home–and I’m not just saying that because I’m a Realtor and want to sell you one of these great Boise homes that are for sale! 😉
But there is so much more to buying your first home than factoring in a mortgage payment! In fact, the process can often start months before you actually buy your home!
5 Steps to Becoming a First-time Home Buyer!
Step 1: Check (and fix) your Credit
Your credit score is probably already on your mind–its on everyone’s mind! But do you know what yours is? Do you know how to find out what it is? AnnualCreditReport.com isÂ the official site to help consumers to obtain a free credit file disclosure, commonly called a credit report, once every 12 months, from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion.
You should be doing this once a year anyway! But if you are serious about getting into your first home, do this now. As in today. And find out where you are at. And even if your credit isn’t great (say a FICO score below 700) that doesn’t mean you can’t do things starting today to start improving it by the time you need to qualify for a mortgage loan!
Step 2: Save for a Downpayment & Closing Costs
The more you can put down the simpler buying your first home becomes (and the lower the cost of your loan is too)! But for most first-time home buyers coming up with 20% of the cost of the home isn’t realistic. As well you will have closing costs that can sometimes run as high as 4% of the homes value! Oh my…
Fortunately there are many great programs out there to help you get into your first home. The most common option is an FHA 203 (b) loan where, if you qualify, the downpayment can be as low as 3.5% and closing costs can even (sometimes) be wrapped into the loan! However, these loans usually have slightly higher interest rates too.
Regardless of the loan you end up getting, what you need to know as a perspective first-time home buyer is you will need cash on hand to purchase your first home! So start saving today if you haven’t already.
Step 3: Set a Budget and Qualify for a Loan
I often say not all Real Estate Agents are created equally; the same can be said for Loan Officers. Find a great one. If you are working with a great Realtor, he or she can help you find the right Loan Officer.
Things start getting real here. With the help of your loan officer you need to set a budget and get qualified for a loan in that price range. Now, I know what you are thinking, shouldn’t I find a home first?
You are just wasting your time and your Realtor’s time if you haven’t qualified for a loan amount yet. There’s no reason to be looking at homes until you know what your budget can afford. And not what you think you can afford; but what a lender thinks you can afford!
Step 4: Find a Home and Make an Offer
This is my favorite part! And it will probably be yours as well. Finding a home is fun, challenging and even stressful at times, but its your first home! So in the end the roller coaster ride is worth it. And it will be a roller coast ride with plenty of ups and downs.
A good agent will be leading you through the process every step of the way. But remember, you’re on a team and the quarterback can’t do it alone. In fact, there are some things your agent specifically can’t do for you! Your agent can find you the perfect 3 bed 2 bath 1 story house, but Fair Housing laws prohibit agents from directing clients to or away from specific neighborhoods because, for instance, the schools might not considered as good in one neighborhood compared to another neighborhood.
You are on the team too and you need to do your research. Talk to neighbors, research schools and check sex offender registries.
Once you make and offer your agent will quarterback you through that process as well. It can be challenging at times, but remember your agent has done this before and has all the resources at his or her brokerage to make sure the transaction goes as smoothly as possible!
Step 5: Move in!
This step is a bit tongue and check, but one thing new home owners often over look is hidden costs of owning a home. All those rakes, hoses and other household items you may not own add up fast! Oh, and lets not forget Insurance, Property Taxes, Utilities and all the other costs associated with home maintance that don’t get done with the rake and hose you just bought!
In fact, your monthly mortgage is usually only 2 / 3 the total monthly cost of owning your first home!
The flip side is you aren’t living with mom and dad anymore; or you don’t have noisy upstairs neighbors. In fact, your home is just that…. yours.