First time homebuyer tips!

Buying your first home is a big deal. At CrossCountry Mortgage, we believe the process of buying your first home should be exciting and fun, not intimidating or confusing. With us by your side to answer your questions and guide you through every step of the first-time homeowner’s journey, you’ll feel more confident about your decision and super-stoked about your future.

We also know that you probably prefer to do online research about a major purchase before you decide to speak to someone personally. We’re okay with that, which is why we’ve provided this list of twelve first-time home buyer tips for every future homeowner who is about to begin the homebuying process. We’ll start with the first step:

1. Clean up your credit.

Your credit score is not the only factor in getting approved for a mortgage, but it is an important part of determining what you will be able to qualify for. Here’s how to make sure your score is on point:

  • Know your credit score before meeting with a lender. It is important to know where you stand before applying for a loan. You can get a free credit report once a year online by visiting annualcreditreport.com.
  • Verify that your credit report is accurate. Identify any errors and dispute them with the credit bureau as soon as possible. Any unresolved disputes may lower your credit score and delay your loan approval.
  • Pay down high credit balances. Chipping away at those bills may positively affect your credit score and help you get approved with a better interest rate.
  • Set up payment plans on any delinquent credit lines. Call your creditors and work out a budget-friendly plan that won’t harshly affect your debt-to-income ratio.

2. Establish your budget for the loan.

When you’re trying to figure out how much house you can afford, start with your income. Then be sure to include all of your expenses, including:

  • Monthly bills (utilities, loans, etc.)
  • Your costs of living (food, entertainment, etc.)
  • Estimated property taxes
  • Estimated homeowner’s insurance
  • Estimated private mortgage insurance
  • Potential Homeowners Association fees

In addition to these recurring costs, remember to factor in one-time costs during the buying process, including closing costs and your down payment. Need help? Use our Buyer Cost Estimate Calculator.

Couple reading tips about buying their first home

3. Calculate your debt-to-income ratio (DTI).

Traditionally, lenders will not qualify you for a mortgage unless your DTI is less than 40%. You can change your debt-to-income ratio by either increasing your monthly income or decreasing the amount of debt you carry each month. The second option is usually easier than the first, so pay down as many open credit accounts as you can.

4. Don’t choose a mortgage lender based solely on rate.

Everyone wants to save money. When it comes to mortgages, saving a bit on your interest rate is great! But it isn’t as important as working with a reputable, trustworthy loan officer that offers a wide variety of loan products and will work with you to get the best financing for your situation.

5. Get pre-approved, not just pre-qualified.

You’re not fully ready to start looking at homes until you understand the difference between pre-qualification and pre-approval.

  • Pre-qualification determines your ability to repay a loan based on the information you provide.
  • Pre-approval is a written commitment from a lender to extend a mortgage to you for a specific amount and time period. This involves an analysis of your financial status and credit history.

With a pre-approval, you’ll be able to set your budget, negotiate confidently and close faster. Realtors and sellers will often take your offer more seriously if you get pre-approved prior to house shopping. It lets them know you are ready to make a deal! 

6. Choose a real estate agent carefully.

Make sure you work with a real estate agent you can trust, who is experienced, and who has your best interests at heart. It’s always a good idea to get referrals from family and friends who’ve been through the homebuying process.

7. Location is everything.

When choosing a home, include neighborhood safety, public school ratings, your daily commute and local amenities in your decision. If parks, libraries, pools, sports arenas, churches, restaurants or shopping centers are important to you, make sure you consider their proximity to your neighborhood.

8. Don’t make financial changes during the loan process.

All aspects of your income and finances are on the table when applying for a loan. Don’t make any major purchases like a car, large appliances or furniture, and don’t move untraceable money into or around your accounts. Also avoid changing employers during the home loan process. Steady employment will likely be a factor in determining what loan you qualify for.

9. Get a home inspection.

Inspections are important, and in some cases required, to help you fully understand the condition of a home. They can also be helpful for negotiations to help drive prices down or have additional services stipulated in the contract.

10. Get all details in writing.

During the purchase process, a seller may make a variety of verbal guarantees. For example, the seller may promise to fix the roof before you move in or provide all of the kitchen appliances. Make sure this information is included in writing in any agreements you sign. If an agreement is not explicitly written in a contract, the seller is not obligated to abide by it. This also includes all of the details of your loan. Make sure the amount, payments, rate lock, and other details are clearly stated in writing in a signed document.

Most important is to have fun while home shopping! It can definitely be a stressful time, but with experienced realtors and loan officers, we can help you through the stress!

Leslie Vanderwerf,  NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website

Written By

Currently a Senior Loan Officer at Cross Country Mortgage LLC, it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

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