First Time Home Buyers

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First time home buyer's in New Jersey are stuck in a storm of low inventory, high seller demand and tight bank-credit availability.

In these current conditions, even simple connections a potential home buyer can have often make the difference between owning a home or not.

Here are my top 10 tips for finally getting into that home you've been searching for:

1. Know what you can afford right from day 1

You have to know how much you can afford before looking. There's nothing worse than finding the perfect home and realizing that the bank won't give you the money you need to buy it and move in. Make sure you also calculate the overall monthly payments including additional costs like property taxes, insurance premiums, homeowners insurance, homeowners' association dues (if applicable), etc. Look at your monthly budget to understand how a mortgage payment will fit into it.

2. Identify your potential down payment

Do you have 20% of your ideal purchase price available for a down payment? If not, don't be discouraged, that's often considered the bank norm, but there are other options available. If you don't have the funds for a significant down payment, it may not be a problem. There are a variety of loan programs offered at various credit levels. Some mortgage programs have loans that offer a 3.5% down payment or even a no-down payment option for veterans and active military. It is important to note, however, that most loans that offer less than 20% down have additional insurance premiums that will add to your monthly payment.

3. Work with a real estate agent that you trust

Pinpoint the area you'd most like to live in and connect with a real estate agent who knows the area. The agent will be able to offer insights into local matters like taxes, schools, new developments and other issues that may be important in the real estate process. Don't be afraid to work with new agents as most agencies require a mentorship program for their new agents. Mentors are usually seasoned veterans and walk through the entire process with the agent.

4. Evaluate your preferred neighborhood(s)

You think you know where you want to live, but how much do you actually know about the actual neighborhood(s)? Visit the area at different times of the day, including during heavy commute times, weekends and later in the evening. What's the traffic like for kids playing in the neighborhood? How far is the nearest grocery store? Also, talk with the neighbors in your desired community. What do they like about the local community? What do they dislike? Their perspectives may offer great insight into your decision.

5. Get your credit cleaned up

Buying a home is an enormous financial decision. Get prepared early. Get a copy of your current credit report, identify any discrepancies, and get them fixed — if possible — before you talk to a lender.

6. Hold off on most credit purchases

Purchases like gas and groceries are fine, in fact they are good. Credit bureaus actually punish those that don't use their cards and leave small balances on them. Basically, use credit cards under the assumption that at any give time you could pay them off immediately. All credit cards, including large purchases, such as a car loan or lease, will impact your debt-to-income ratio. Changes to this number may affect your ability to qualify for the loan amount you require. Avoid taking out any loans or adding significant debt to credit lines within 3 months of applying for a home loan.

7. Season your down payment funds

Make sure your down payment and closing-cost funds are in your account 60 to 90 days prior to closing on your home. Some loan programs may require "seasoning" on those funds, meaning they have been in your account for a certain amount of time. Be sure to know about any conditions on these funds from your lender so that you don't hold up closing. If you will be using any gift funds from family or friends for your home, be sure to get them prior to when you will need them.

8. Understand rate vs. points

With the many financial considerations that go into buying a home, none may be as confusing to first-time home buyers as the issue of "points." To start, in the real estate arena, points are generally a fee that is paid to the lender to lower the interest rate on your mortgage. One point is equal to 1 percent of the loan amount. Is it better to get a lower interest rate by paying points upfront? Or are rates so low that the reduction offered by "buying down" the rate is minimal? Consider these options carefully, and make use of the many online tools and calculators to help you understand the cost implications of both.

9. Know where you stand with lenders

Borrowers with higher credit scores — like those with scores of 720 or above — can often shop around for the lowest available interest rate and get a conventional loan. Borrowers with lower credit scores, especially those with scores of 640 and lower, may experience higher rates because of the potentially higher assumed risk by the lender. For these borrowers, don't be discouraged if you can't get the lowest rate. There often are still many promising loan options available, and the difference in payment due to the higher rate may be less than you expect. The good things is that you can always do something about it later in order to lower the rate (so long as rates stay low).

10. Take a leap of faith

Trying to time the market perfectly is impossible. Even as a realtor I don't know the perfect time to buy because at any moment everything could change. My best advice is to find the home that is right for you now and take the leap if you're ready. Waiting may cause you to miss out on lower rates, lower home prices or even the perfect home.

I Was You A Short Time Ago ...

It wasn't that long ago that I was a first time home buyer. I know how nerve wracking it can be. You not only have my dedication as an agent, but also my dedication as an educator. Given my vast knowledge in sales, negotiation and home renovations, many are surprised to find me extremely warm, calm and down-to-earth.

I've been told more than once that I might be the nicest person they've met in New Jersey. With an uncanny ability to connect with your needs on a personal level, I will be your greatest advocate, always keeping your interests and needs top of mind. Along with my fellow team members at Keller Williams Central Monmouth, my service philosophy of handling last-minute viewings and other requests with efficiency shows great maturity and dedication to you.

If I can help in anyway, >> Click here to Contact Me! <<

Take care!