What to Expect—A Guide for First Time Homeowners
Buying a home for the first time is an extremely important moment in your life, but sometimes it can feel incredibly intimidating. At Alvarez Construction, we want you to be completely confident throughout the buying process, so we’ve put together a list of key factors you should know before you buy.
Boost your credit score
First things first—it’s never a bad time to boost your credit score. Before you get into the deep end of figuring out what you can afford and shopping around for what homes you’re interested in, start finding ways to increase your credit score before the time comes to talk to a lender.
Hold off on making any major purchases such as buying a new vehicle or applying for a new credit card. These are both known as hard inquiries and, if you have too many of them—they can affect your credit score—sometimes up to a full year.
Next, take into account the credit limit on your credit card. Keeping your outstanding balance at 10% is ideally where you’d like to be to start improving your credit score, but if you’re unable to do that right away—keeping it below 30% is a good rule of thumb. The easiest way to make sure you keep your outstanding balance low is to pay off your credit card in total each month, but sometimes that’s not always a possibility. If that’s the case, simply make sure that you’re paying what’s due each month on time, and work your way toward getting it lower and lower each month.
Consider getting a realtor
When buying your first home, it’s helpful to have someone on your side who knows the ins and outs of the home buying process. There are tons of thoughts running through your mind everyday when you’re in the process of buying a home for the first time, and if you have someone there to help alleviate those worries and take on the logistics side of things—you’ll realize how smooth the process can be. Ask your friends and family to see if they went through a realtor that they loved when buying their homes. You’ll want to do your research in this subject to find the best person for the job.
Know your budget
Before you start shopping for the perfect house, you’ll need to figure out your finances. Buying a home is undoubtedly one of the biggest purchases you’ll make, but that doesn’t mean it’s out of your reach—you just have to stick to your budget.
For this step, you’ll want to take a look into the different routes you can go for lenders. When you find a lender you want to work with and go in to get pre-approved for a mortgage, there are a few things you’ll need to give them.
- Have some form of identification for them like a drivers license.
- You’ll need to provide proof of income with W-2 statements and tax returns from the past two years, pay stubs showing income and year-to-date income and they’ll also need proof of any additional income such as alimony or bonuses .
- Supplying proof of employment is important so you can show your lender that you’ll be able to pay back what you are going to borrow from them. You’ll need to show steady income over the past two years—so if you’ve recently changed jobs, the lender will most likely call your previous employer to verify any additional details they need.
- Your lender will then need your current bank statements or investment account statements that include any of the funds you intend to use toward your closing costs and down payment.
- You’ll also need to provide your social security number for your lender to pull your credit score. Your credit score will affect which loans you can be approved for, how much your down payment will be, how much your interest rate will be and it will show them your ability to pay off debt.
Remember—buying a home is about more than just money
More than anything, buying your first home should be an exciting time in your life. The emotional benefits that come from owning your own home are extraordinary. We want you to be able to plant your roots in a community that you love and turn your first house into the home you have always wanted.At Alvarez Construction, we build a variety of homes that are perfect for any family and any budget. If you’re a first time home buyer and you want a lower cost home without sacrificing the beautiful, modern aesthetic you’re looking for, take a look at our Dawson’s Bluff Townhomes in Baton Rouge—we’d love to talk to you about this incredible community.