It’s exciting — and a little scary — to think about buying your first home. Even when you know you’re ready to buy a house, you might not be sure where to begin.

Preparation is key so here are 8 home-buying tips for first-time home buyers to help you navigate the process from start to finish.

1. Build Your Savings

To buy a house it’s important to save for the big three:

• Down Payment – Depending on the loan, there will be a minimum down payment. Count on paying at least 3% of the property’s purchase price—but aim for 20%. If you pay less than 20% upfront, you may have to pay private mortgage insurance or other fees.
• Closing Costs – These are the fees and expenses you pay to finalize your mortgage, and they typically range from 2% to 6% of the loan amount. Your closing costs on a $300,000 loan could be between $6,000 and $18,000.
• Moving Expenses – Remember to budget for moving costs, which typically run up to $2,500 for most local moves or more for long-distance moves. Also set aside money for immediate home repairs, upgrades, and furnishings.

2. Polish Your Credit

Ensure your score is at its best before you apply for a mortgage. Check your score with all three major credit bureaus once a year for free. If you need to improve your credit score, follow a budget, pay your bills on time, and pay off your debt.

3. Decide What You Can Afford

Evaluate your financial situation. Use our mortgage calculator to run a variety of scenarios to determine how much you can comfortably borrow for your home.

4. Find a Lender

If you’re ready to buy a home soon, now is the time to start looking into lenders. Start your search with your current financial provider since you already have a history and relationship with them. Look for a lender who will work with you and your needs and who offers first-time home buyer solutions.

5. Learn About Loan Options

A variety of mortgages are available with varying down payment and eligibility requirements. You also have options when it comes to the mortgage term. Most home buyers opt for a 30-year fixed-rate mortgage, which is paid off in 30 years and has an interest rate that stays the same. A 15-year loan typically has a lower interest rate than a 30-year mortgage, but the monthly payments are larger.

6. Get Pre-Qualified

Once you’ve decided on a lender, it’s time to get pre-qualified. Most sellers prefer to work with prequalified buyers because they know these buyers can pay the asking price. Take this opportunity to discuss the different types of mortgages to find the best one for you.

7. Choose a Quality Realtor

A good real estate agent will take the time to understand your wants and needs and search the market for homes that meet your requirements. They will also guide you through the search, inspection, negotiation, and closing processes. Get agent referrals from other recent home buyers. Interview at least a few agents and request references.

Ask about their experience helping first-time home buyers in your market and how they plan to help you find a home. You might also ask how they find homes that aren’t yet on the market, which can be a handy skill when competition is fierce.

8. Hold the Line

When you are close to buying a home, be very cautious about making any changes or large purchases. Any change you make that impacts your financial situation such as changing jobs or applying for credit, can affect your loan qualifications. Wait until after you close on your home to make these changes.

When you’re ready, Members Trust is ready to help guide First time home buyers through the process. Contact us to discuss your home loan options.