Buying your first home is a big life moment. It can be exciting, but it can also be intimidating. Dealing with credit, mortgage rates, loan types, fees, and more, can feel like trying to learn a new language. The good news is, with our insider's guide and by asking the right people the right questions; you can go from home buying novice to confident pro in no time!
 
1. Fix your credit score before applying for a home loan.
Review your credit report free at: www.annualcreditreport.com. Be sure to review your credit history from each of the three credit reporting agencies. Verify all the information is accurate and dispute any errors. 

2. Know your budget when home shopping.
The first step in the home buying process is knowing what you can safely afford. Your Mortgage Specialist can get you pre-qualified for your loan amount but be sure to go over all the added fees that may fall outside your budget before falling in love with a home.

3. Consider the total cost of home ownership into your budget.
When purchasing a home you need to include the cost of property taxes homeowner’s insurance, home maintenance within your monthly budget. You will be responsible for all repairs, major and minor. Also, take into consideration if your new home will need a new roof, deck or heating/cooling system in a few years, this may be an added expense into your budget.

4. Research your mortgage lender, real estate agent, attorney and home inspector.
When you purchase a home, you will need help from a number of real estate professionals. Do your homework and find professionals you can trust. Ask for referrals from your friends and family. Be sure to ask a lot of questions and look at reviews online.

5. Look for the lowest rate rather than the lowest overall cost.
Don’t be lured in by the lowest interest rate offered. Ask about all the fees and costs for your loan. When comparing rates, make sure you compare the APR (annual percentage rate) for all lenders you are considering. Be sure you understand all aspects of the home loan and compare all the fees, not just the rate on the loan.

6. Buying too much house for your budget.
When you buy a house, take into consideration the fact that you also have to furnish and decorate it. Don’t forget about the cost of water, electricity and maintenance costs. After you buy a home, you’ll still want enough money to have a social life, so don’t stretch yourself too thin.

7. Understand the terms of your loan; don’t get the wrong type.
It is important to understand mortgage terms and conditions. Know the length of your mortgage and whether it has a fixed or variable rate. For most first-time buyers, a fixed rate mortgage is the preferred type because your rate and payment will be consistent. Know whether your property taxes will be rolled into your monthly payment or if you will pay them separately. If taxes are part of your monthly payment, your lender will hold the money in an escrow account and pay the taxes when they are due.

8. Don’t pay too much in fees
From appraisals to closing costs, there is no way to avoid fees as a first-time homebuyer. However, knowing what you should pay and how much is too much will save you money and stress. Make sure all fees are explained to you — and don’t forget to compare them with other lenders.

9. Understand the difference between interest rate and APR
Put simply, the interest rate is just one part of your overall cost, while the APR combines the interest rate and other costs to give you a more accurate understanding of all costs. In other words, the APR is the number you should use when comparing costs.

10. Don’t underestimate the costs of renovating a fixer-upper
You found a home in the perfect location down the street from your friends and in your first-choice school district—but it only needs a new roof, some walls knocked out to open up the floorplan, a complete kitchen and bathroom update and there might be some foundation cracks. If you consider a fixer-upper, make sure you know all the costs of actually fixing it up including how long it will take and the full cost. Be sure you have the budget and patience to make the house into your dream home or keep looking for your next dream home.

11. Ignoring special first-time home buyer grants and programs
Be sure to investigate special loan programs designed for first-time homebuyers. You could qualify for free money! There are available low down-payment options, grants and programs that will help you with money toward closing costs or your down payment if you qualify. You can also stack grants and programs for extra benefits. If you are a veteran, you may also have special VA loans. Speak to your Mortgage Specialist and investigate if you are eligible for city, state and national down payment assistance. Local financial institutions also may have assistance programs, like the Marquette Bank Affordable Housing Foundation Grant that is eligible for low- to moderate-income levels within different area’s around our branches.
 
If you have any questions about any of the mentioned “to-do” items or would like help getting started on your home buying journey, call one of our dependable Mortgage Specialists today at 708-364-2525 or email us at mortgagecenter@emarquettebank.com.  Learn more at www.emarquettebank.com.