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Nine Hidden Costs of Buying Your First Home

An inviting suburban home surrounded by a lush garden and tall trees, illustrating the theme of the blog post about hidden costs associated with purchasing a house.

Most buyers underestimate the costs of buying a home. It’s important to consider all the costs involved beyond the purchase price. While many first-time home buyers diligently save for the down payment, there are several hidden costs that can catch them off guard. In this blog post, we’ll shed light on nine often overlooked costs when buying a home. By being aware of these hidden expenses, you can better prepare your budget and ensure a smooth transition into homeownership.

see how much home you can afford

Property Taxes

Property taxes can significantly impact your monthly payment. Taxes when it comes to properties are assessed at the local and state level. Before buying familiarize yourself with the state’s property tax rate. Then research the property tax rates in the specific counties or zip codes of your home search. Your Savvy Mortgage Expert will need these details to give you an accurate idea of how taxes will impact your monthly payment.

Homebuyer review home documents and inspection report revealing potential hidden costs in home purchase

Homeowners Association (HOA) Fees

If you’re thinking about a home in a community with an HOA, be prepared for monthly or annual fees. These fees cover amenities, maintenance, and communal services. Review the HOA documents to understand the fee structure and any potential increases in the future.

Private Mortgage Insurance (PMI)

If your down payment is less than 20% of the home’s purchase price, your lender may require you to pay PMI. This additional cost protects the lender in case of default. It’s important to factor in this expense when calculating your monthly mortgage payments.

Home Inspection Costs

While a home inspection is a crucial step in the buying process, it comes with a cost. Hiring a professional inspector can range from a few hundred to a few thousand dollars, depending on the size and complexity of the property. Remember, investing in a thorough inspection can save you from expensive surprises later on. Home inspections are the best way to uncover problems with the house that would otherwise be unknown to the buyer. Do not scrimp at this cost. It will protect you from future expenses.

Closing Costs

Both buyers and sellers have closing costs when buying a home. While the seller’s closing costs are typically paid out of the proceeds from the sale of the home. Buyers have 4 ways to pay theirs. One, they can pay cash out of pocket. Two, negotiating a seller credit into their home purchase contract to have seller proceeds pay a portion of their closing costs. Three, secure a lender credit, which sometimes increases the mortgage interest rate. Four, downpayment assistance programs often allow funds to be applied to buyer closing costs.

Buyer closing costs encompass various fees, including appraisal fees, title search fees, attorney fees, and more.

These costs typically range from 2% to 5% of the home’s purchase price. Before closing, request a breakdown of the anticipated closing costs from your lender or real estate agent to avoid any surprises.

Table comparing the closing costs for buyers and seller when buying and selling a home.

Home Insurance

Homeowners insurance is a necessity to protect your investment. Premiums can vary based on factors such as the home’s location, value, and coverage you choose. Research insurance providers and obtain quotes to estimate the ongoing cost of insuring your new home.

Moving Expenses

Don’t overlook the expenses associated with moving. Whether hiring professional movers or renting a moving truck, these costs can add up quickly. Factor in packing supplies, transportation, and any storage fees if needed.

House Hold Appliances

Household appliances, like water heaters, dryers, and refrigerators, have finite lifespans due to wear and tear over time. Regular replacement is essential not only to maintain their efficiency but also to ensure safety. Neglecting the replacement of aging appliances could lead to reduced performance, increased energy consumption, and potential safety hazards, underlining the importance of staying mindful of their natural life spans.

Infographic on how long home appliances last. Showing the appliance, average life span and average cost to replace. Shows hidden costs most buyers don't think about when buying a home.

Maintenance and Repairs

Owning a home means taking care of ongoing maintenance and repairs. From routine maintenance tasks to unexpected repairs, allocate a portion of your budget for these expenses. Having a contingency fund will help you handle these costs without financial strain. Check out our Homeowner’s Guide for more home maintenance tips.

Utilities and Home Services

When moving into a new home, remember to account for utility costs such as electricity, water, gas, and internet. Additionally, consider expenses related to home services like pest control, landscaping, and garbage removal.

As a first-time homebuyer, being aware of these hidden costs is crucial for planning and budgeting effectively. By considering expenses beyond the purchase price, such as property taxes, HOA fees, and home maintenance, you can make informed financial decisions and avoid unwelcome surprises. Remember, careful planning and due diligence will help you navigate the home buying process with confidence and enjoy the benefits of homeownership for years to come.

Review your financial situation with a savvy mortgage expert

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 Posted on August 17, 2023 by

 Financial Literacy, First-Time Homebuyers, Homebuying Tips

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Big Mistakes First-Time Homebuyers Make

first time buying a home

Buying a home for the first time is an exciting milestone, but it can also be a complex and scary process. To ensure a successful home buying journey, it’s crucial to be aware of common mistakes that first-time homebuyers often make. By avoiding these pitfalls, you can save yourself from unnecessary stress, financial setbacks, and potential regret. In this article, we’ll delve into the seven most critical mistakes that first-time homebuyers should steer clear of. Let’s explore each of these pitfalls and learn how to buy your first home with confidence.

Mistake #1: Not Having a Realistic Budget

A common oversight among first-time homebuyers is failing to establish a realistic budget. Without a clear understanding of your financial abilities, you may find yourself in over your head. To avoid this mistake, carefully evaluate your income, expenses, and debt to determine a comfortable monthly payment that you can afford.

Find out how much home you can really afford with our quick Buying Power Approval™.

Mistake #2: Not Correcting Credit Report Issues

Your credit score plays a significant role in getting a favorable mortgage rate. Failing to correct any errors or address negative marks on your credit report can result in higher interest rates or even loan denial. Take the time to review your credit report and address any issues to ensure the best possible loan terms.

Mistake #3: Not Comparing Mortgages Options

As a first-time homebuyer, choosing the right home loan is crucial to your long-term financial stability. Many first-time homebuyers make the mistake is not understanding the differences in the home financing options to advocate for themselves. Take the time to learn about the pros and cons of the different lending options.

“When we bought our first home our realtor was also the listing agent for the seller. We were encouraged strongly to use their preferred lending partner who admitament that the FHA Loan was a better option for us (over our VA Loan). Now looking back I realize that the seller wanted us to use the FHA Loan, but it cost us more and we had a higher interest rate. Ultimately we ending up refinancing into a VA Loan monthly later. I wish I had known more about the different type of loan prior to buying our first home. It would have saved us a lot of time, money and stress.”

lauren taylor, co-found savvyhomebuyer.com

Between the FHA loan, USDA home loan and VA loan each has pros and cons. Ask your Savvy Mortgage Expert to 1) identify which home loans you qualify for and 2) create a comparison chart to help you see the cost difference and interest rates available with each loan product. This should give you a clear understanding of what the right mortgage product is for you and why.

Mistake #4: Leading with Emotions

It’s easy to get caught up in the excitement of finding your dream home, but making emotional decisions can lead to regret. Avoid the mistake of overlooking crucial factors such as location, property condition, and future resale potential. Remain level-headed and consider all practical aspects to ensure a wise investment.

Mistake #5: Making Big Financial Decisions During the Home Buying Process

It’s crucial for a first-time homebuyer to avoid making significant financial decisions, such as large purchases or applying for credit. These actions can impact your creditworthiness and hurt your current debt-to-income ratio. Ultimately adding to debt or making a big purchase in the middle of your transaction could jeopardize your ability to buy the home. Your goal should be to maintain financial stability until after the closing process is complete.

Mistake #6: First-Time Homebuyers Should Never Waive the Home Inspection

Opting to skip a home inspection to expedite the process or appease the seller, is a grave error. As a first-time homebuyer it is difficult to know the problems to look for when buying a home. A professional home inspection provides crucial insights into a property’s condition, potential repairs, and safety concerns. Even in competitive real estate markets, we do not recommend buying a home without verifying its condition first. This first-time homebuyer mistake could financially ruin you if the property ends up having hidden issues.

Mistake #7: Underestimating the Costs of Owning a Home

First-time homebuyers often underestimate the financial responsibilities that come with homeownership. Beyond the mortgage payment, there are additional costs like property taxes, insurance, maintenance, and repairs. It’s essential to budget for these expenses to ensure you can comfortably handle the additional financial needs of owning a home.

In conclusion, mistakes will make or break your first-time homebuying experience. The journey of becoming a first-time homebuyer can be filled with excitement and anticipation. However, it’s important to navigate this path with caution and avoid common mistakes that can have long-lasting consequences. By learning from the experiences of others, such as not having a realistic budget, neglecting credit report issues, or underestimating the costs of homeownership, you can set yourself up for a successful and fulfilling homeownership experience. Remember, being a Savvy Homebuyer is all about arming yourself with knowledge, seeking professional advice, and making informed decisions!

This will empower you to make the right choices and embark on this new chapter of homeownership with confidence. Happy homebuying!

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 Posted on June 21, 2023 by

 Down Payment, Financial Literacy, First-Time Homebuyers, Home Financing, Homebuying Process, Homebuying Tips, Homeownership Tips

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How To Get An FHA First Time Homebuyer Loan

first time homebuyer fha approved home

If you are considering buying your first home but struggling to qualify for a traditional mortgage then an FHA loan may be the perfect solution for you. Understanding the benefits and drawbacks of an FHA loan can help you finally achieve your homeownership goals. Here is what every first-time homebuyer needs to know about getting an FHA loan.

check your fha elgibility

Why FHA Loans are Great for First-Time Homebuyers

FHA loans are mortgages insured by the Federal Housing Administration. These loans offer down payment options as low as 3.5% for credit scores of 580 and above. However, borrowers should be aware of the mortgage insurance premiums required to protect lenders in case of default.

Who is considered a first-time homebuyer?

The FHA considers a first-time home buyer as someone who:

Has not held ownership of a home in the US during the last 3 years.

Whose name has not appeared on the title of a property in the last 3 years.

It is important to note, that an individual who has been listed on a mortgage in the last 3 years is not disqualified from FHA eligibility. So long as the person’s name did not appear on the title of the home.

FHA Loan Requirements

The FHA home loan has specific requirements that borrowers must meet. These include a minimum credit score, typically around 580, although some lenders may accept lower scores. Additionally, borrowers must demonstrate a stable employment history and sufficient income to repay the loan.

The FHA also sets limits on the amount borrowers can borrow based on their location.

FHA Home Loan Minimum Eligibility Requirements. Savvy Homebuyer graphic on the credit score, down payment, debt to income ratio needed for a first-time home buyer FHA Loan.
get pre-approved for the fha home loan

Furthermore, applicants must undergo a thorough appraisal process to ensure the property meets certain standards and is suitable for financing. Understanding and meeting these requirements is crucial for individuals considering an FHA home loan.

Benefits of the FHA Loan

Requires a low down payment

With rising home costs one of the most difficult obstacles for first-time buyers is saving a down payment. While conventional financing options can require a substantial amount the FHA Loan requires a minimum of 3.5% of the home’s purchase price.

Flexible credit score standards

Additionally, the FHA loan has more lenient credit requirements compared to other mortgage options. To be eligible for the 3.5% down payment option a homebuyer must have a credit score of 580 or greater. On another note, if a homebuyer’s credit is below 570 at the time of close, the FHA will require a 10% down payment.

Pros and Cons graphic for the FHA Home Loan for first time homebuyers.

Competitive Interest Rates

Most importantly, FHA loans can often offer lower interest rates, allowing you to save thousands over the life of your mortgage. Lenders finance these loans based on the security of the FHA insurance, which lowers their risk, allowing them to offer more competitive rates.

Drawbacks of FHA Loans

While there are numerous benefits, it’s important to consider the potential drawbacks. Understanding these limitations can help you make informed decisions about which mortgage is right for you.

Mortgage Insurance Premiums

One of the most significant pitfalls of an FHA loan is the mortgage insurance premium (MIP), which is a requirement for all FHA loans. The FHA Mortgage Insurance Premium (MIP), is the FHA’s version of PMI. It is an additional the borrower pays to protect the lender from losses in the event the loan defaults. It is important to note that there is an upfront insurance premium of 1.75% of the loan amount at closing, and then a monthly premium for the life of the loan.

Get a monthly mortgage estimate here and find out how much MIP will impact your monthly mortgage payment.

FHA Loan Limits

The FHA sets loan limits based on the county, and the limits are usually lower than those of other mortgage products. This means you may not be able to buy the home you want if it exceeds the FHA’s loan limits, and you may need to go for conventional financing options instead. Search your desired zip code here for the loan limit in your area.

Home Requirements for FHA Loans

Not only does the buyer have to qualify for the financing, but the home also must meet certain value and condition requirements. Including:

  • An appraisal must be completed on the home. The FHA-approved appraisal report must confirm that the value of the home is at least the agreed purchase price.
  • The home must be a primary residence.
  • The home buyer must take possession of the home and occupy the property within 60 days of closing.
  • The home must meet minimum condition standards.

If you are struggling to save a down payment and have less-than-ideal credit, the FHA loan could be the answer to making your homeownership dreams a reality. Take a moment to complete our Weigh the benefits and drawbacks and do your research so you can make an informed decision.

Commonly Asked Questions About First-Time Home Buyer Information on The FHA Home Loan

FHA vs Convention Home Loan

The FHA loan, backed by the Federal Housing Administration, typically requires a lower down payment and has more lenient credit requirements, but comes with mandatory mortgage insurance premiums. In contrast, conventional loans, not insured by the federal government, often have higher credit score requirements and larger down payments, but they offer more flexibility in terms of loan terms and the potential to eliminate private mortgage insurance once a certain equity threshold is reached.

Comparing the FHA home loan to the conventional home loan for first time home buyers.

Home Buying Process with The FHA Home Loan

The FHA home loan process begins with a potential buyer getting pre-approved by an FHA-approved lender, ensuring they meet specific income, credit, and down payment requirements. Once pre-approved, the buyer can confidently shop for homes within their budget, knowing the FHA will back their mortgage. After selecting a property, the buyer proceeds with the loan application, and property appraisal, and finally closes the deal, benefiting from the FHA’s lower down payment and more lenient credit criteria.

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 Posted on June 19, 2023 by

 Down Payment, Financial Education, Financial Literacy, First-Time Homebuyers, Home Financing, Homebuyer Education, Homebuying Process, Homebuying Tips, Loan Options, Mortgage Loans, Mortgage Programs

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Insider Tips For Buying Your First Home in Florida

Buying Your First home in florida - home for sale florida

Buying your first home in Florida can be an exciting but intimidating experience. Florida, with its diverse housing market and emphasis on outdoor living, can be an especially attractive option for first time homebuyers. So whether you are a local who is tired or renting or are considering a cross-country move buying a home in Florida may be the right move for you. Whether you’re drawn to the sandy beaches of Miami or the bustling city streets of Orlando, this guide will help you navigate the home buying process and make your first home purchase a success.

The Florida Real Estate Market

If you’re considering buying a home in Florida, it’s important to understand the factors that shape the state’s real estate market. Florida’s real estate market is influenced by economic expansion, job creation, population growth, and interest rates. Notably, there has been a surge in people moving to Florida from other states, driving up housing demand.

The COVID-19 pandemic has also changed the market, as more individuals prioritize spacious homes with dedicated offices and outdoor spaces. Furthermore, the demand for second homes and holiday homes has seen a notable increase, particularly in warm climate regions offering outdoor recreation options. As a result, Florida’s real estate market is expected to continue to grow in the next 5-10 years.

Florida Homebuying Process

Get your Home Loan Pre-Approval

The first step to buying a home in Florida is getting qualified for your home loan. This can be a simple and easy process starting with completing our quick Buyer Power Approval™.

get approved

Choose an Agent

Once you have your budget and the area then it is time to pick an agent that is an expert in the area. Not all agents are equal which is why we have top local real estate professionals ready to help our Savvy Homebuyers.

Complete this quick questionnaire to be connected with our local expert.

Find A Home

It is important to note that the average homebuyer will tour 13 houses in search of their new home. Your agent will set up showings based on the homes that meet your needs and budget for the area.

Due to limited home inventory, we highly recommend moving quickly if you find a home that interests you.

Write an Offer

The offer sets the terms for the purchase contract. Once you and the seller are in agreement on the price and terms the contract period can start.

Home Inspection

During this time having a professional examine the condition of major property systems like electricity, plumbing, roofing, etc. will save you from buying a money pit.

Home Appraisal

Once the inspection is completed an appraisal is scheduled. The appraiser will confirm the value of the home and make a record for the mortgage lender.

Close and Move into Your First Home

Lastly, you will sign loan documents, wire the down payment and closing costs and close on your first home!

How much home can you afford in Florida cost?

The median home price in Florida is around $300,000, but prices can vary significantly depending on the specific city or region.

Required Down Payment Based on Loan Type

The down payment amount you’ll need depends greatly on the type of mortgage loan you choose. Let’s take a closer look at how much you would need to put down for a $300,000 home with each of the five major loan programs:

Conventional Loan

$9,000 (3.5% down)

A loan that conforms to Fannie Mae and Freddie Mac’s guidelines, including a minimum credit score of 620.

VA Loan

$0 (0% down)

Only available to military service members and veterans who have reached minimum service thresholds. Surviving spouses may also apply.

FHA Loan

$10,500 (3.5% down)

Backed by the Federal Housing Administration. Your credit score may be as low as 580 if you have a 3.5% down payment.

USDA Loan

$0 (0% down)

You need to purchase in a designated rural area and have a low-to-moderate income for the area where you’re buying.

No-PMI Conventional Loan

$60,000 (20% down)

If you want to avoid private mortgage insurance (PMI) you need 20% down. But you may find lenders that allow you to borrow a second mortgage to bridge the gap between your savings and that 20%.

Estimated monthly mortgage on Florida homes

Savvy Mortgage Calculator

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Florida offers affordable home buying options

When buying a home in Florida, several financial advantages come into play. With no state income tax, residents keep more of their earnings, while the lower cost of living makes housing more affordable. Florida offers diverse housing options for different budgets, along with property tax exemptions. Furthermore, Florida has no estate tax, allowing families to preserve wealth. The market occasionally offers foreclosed properties at discounted prices, adding to the financial benefits of buying a home in the Sunshine State.

Florida First-Time Buyers programs

Florida has taken steps to facilitate homeownership for first-time buyers by creating a range of homebuying assistance programs. The Florida Housing Finance Corporation (FHFC) has been instrumental in offering statewide programs such as:

Florida Housing Finance Corporation (FHFC)

Florida First

Florida Assist

Florida HFA Preferred Conventional Loan

Florida HFA Preferred PLUS Conventional Loan

First-time homebuyer programs like these have taken significant steps to keep homeownership within reach for Florida residents.

Additional Homebuyer Programs by County in Florida

In addition, numerous counties and cities in Florida have also rolled out their own programs, offering personal support. For example, programs like the Homeownership Assistance Program in Miami-Dade County, the Homebuyer Purchase Assistance Program in Broward County, and the Down Payment Assistance Program in Orange County help relieve financial burdens and guide first-time buyers through the process.

Florida has many popular cities for first-time homebuyers, each with its unique charm and characteristics. Miami, Orlando, Tampa, and Jacksonville are all favorite destinations for those seeking a new home.

Miami

Miami has beautiful beaches and vibrant nightlife. With a bustling cultural scene and diverse population, it’s a popular choice for young professionals. The city has a thriving arts and entertainment scene, with world-class museums, galleries, and theaters.

Orlando

Orlando, home to Walt Disney World and Universal Studios, is a family-friendly city with affordable housing options. The city is also home to world-renowned theme parks, making it a popular place to visit for families looking for fun and entertainment.

Tampa

Tampa, located along the Gulf of Mexico, is perfect for those who love being outside. The city boasts beautiful beaches, scenic parks, and world-class golfing. Tampa’s downtown area has been undergoing a revitalization in recent years, attracting new businesses and residents to the area.

Panama City

First-time homebuyers are increasingly drawn to Panama City, Florida, due to its unique combination of natural beauty, affordable housing options, and vibrant community. Check out our ultimate guide to buying a home in Panama City.

When you choose a city to buy a home in, it’s important to consider factors such as job opportunities, quality of life, and affordability. Each city has its strengths and appeal, so it’s important to research and visit different cities to find the right fit for you.

Where to Buy a Home on a Budget in Florida

If you’re looking to buy your first home in Florida there are a number of affordable neighborhoods to consider such as Palm Coast-Flagler County, Ocala, and Jacksonville. These areas offer a combination of affordability, amenities, and a desirable quality of life.

Palm Coast-Flagler County

With a variety of neighborhoods, residents can enjoy outdoor activities, including golfing, boating, and exploring nature trails. The area also boasts a strong sense of community and access to amenities such as shopping centers, dining options, and parks.

Ocala

The city is surrounded by picturesque horse farms and rolling hills, offering a tranquil setting. Ocala’s affordable housing options range from single-family homes to equestrian properties, therefore providing a variety of choices for homebuyers. The area also offers a thriving downtown scene with art galleries, local shops, and dining establishments.

Jacksonville

As one of Florida’s largest cities, Jacksonville combines affordability with urban amenities. The city offers a diverse range of neighborhoods, from historic districts to modern suburban communities. With a vibrant arts and culture scene, numerous parks, and miles of beautiful beaches, Jacksonville provides a high quality of life at an affordable cost. The city also offers job opportunities, excellent schools, and a wide array of recreational activities for residents to enjoy.

Why People Are Moving To Florida

In recent years Florida has become a popular place to move to for a number of reasons.

Florida offers a warm climate year-round

One of the primary benefits of moving to Florida is its favorable climate. Known as the Sunshine State, Florida offers a warm and sunny environment for most of the year. The mild winters and long, hot summers make it an ideal destination for those seeking to escape colder climates. The sunshine also promotes an active outdoor lifestyle, allowing residents to enjoy activities like beach outings, water sports, and year-round golfing.

Tax benefits of moving to Florida

Another advantage of living in Florida is its favorable tax environment. The state imposes no personal income tax, which means residents can keep more of their earnings. Additionally, Florida does not tax retirement income, making it an attractive destination for retirees seeking to stretch their savings. The absence of estate tax is another benefit for individuals looking to protect and pass on their wealth. These tax advantages make Florida a great choice for individuals and families looking to maximize their financial resources.

Florida is a Veteran friendly state

Florida is widely recognized as a Veteran-friendly state for several reasons. Its numerous military installations provide job opportunities and a sense of community for Veterans and their families. The state offers tax benefits such as exempting military retirement pay from income tax and giving property tax exemptions for disabled Veterans. Overall, these factors help in making Florida an appealing and supportive destination for those who have served in the armed forces.

In conclusion, armed with these insider tips, you’re well-equipped to navigate the process of buying your first home in Florida. It is important to know that your success and experience as a home buyer will largely be tied to the quality of your homebuying team. Complete your Buyer Powerful Approval™ to start the homebuying process for Florida and you’ll be on your way to securing your dream home in the Sunshine State.

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 Posted on June 18, 2023 by

 Down Payment, Financial Literacy, First-Time Homebuyers, Homebuyer Education, Homebuying Process, Homebuying Tips, Homeownership

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The Best Credit Repair Tips For First Time Homebuyers

Online credit repair improvement learning community. An individual checks their credit score for free online to educate themselves about the homebuying process.

Are you ready to take control of your credit and pave the way to a brighter financial future? Repairing your credit is a journey that requires commitment, consistency, and a clear plan of action. While it may seem like a daunting task, rest assured that with the right credit repair tips and a positive mindset, you can turn things around and improve your creditworthiness.

Credit Is An Important Part of Your Home Buying Power

When determining how much home a buyer can afford mortgage lenders consider several crucial factors. Including buyers’ income, debt, down payment credit history, and credit score.

Boosting your credit score can massively improve your buying power. A higher credit score not only improves your chances of home loan approval but can also qualify you for a lower rate.

Unlock your home buying power in 60 seconds or less with our Buyer Power Analysis™

Review Credit Reports: The Key to Identifying Opportunities

Your credit reports serve as a window into your creditworthiness. They provide a detailed record of your credit history and financial behavior. By reviewing your credit reports from the major credit bureaus—Equifax, Experian, and TransUnion—you gain valuable insights into potential areas of improvement.

Take advantage of your right to a free annual credit report from each bureau at annualcreditreport.com. Look for errors, inaccuracies, or outdated information that might be dragging your credit score down. Dispute any discrepancies you find by filing a dispute with the relevant credit bureau(s). Provide supporting documents or evidence to strengthen your case, and let the credit bureau(s) investigate and correct the errors if necessary.

Dispute Errors: Correcting Inaccuracies to Enhance Your Credit Profile

Mistakes happen, even on credit reports. Unfortunately, these errors can have a negative impact on your creditworthiness. That’s why disputing errors is a crucial step in your credit repair journey. By addressing and rectifying inaccuracies, you can effectively boost your credit profile.

When you spot errors on your credit reports, don’t panic. Stay optimistic and proactive. File a dispute with the credit bureau(s) responsible for the mistake, and clearly explain the issue. Include any relevant documentation or evidence that supports your case. Next, the credit bureau(s) will investigate your dispute and make corrections as needed. Remember, the removal of even a single negative item can significantly improve your credit score.

Pay Bills on Time: Building a Foundation of Responsible Financial Habits

Punctuality is the name of the game when it comes to repairing your credit. Consistently paying your bills on time showcases your reliability and commitment to meeting your financial obligations. This responsible financial behavior is highly regarded by creditors and can help you rebuild your creditworthiness.

Make it a monthly habit to prioritize timely bill payments. Set reminders, create a budget, or automate payments to ensure you never miss a due date. Whether it’s credit card bills, loan repayments, or utility bills, allocate the necessary funds and submit your payments promptly. By doing so, you’ll avoid late fees, penalties, and most importantly, the negative impact on your credit score.

Reduce Credit Utilization: Unlocking the Power of Low Balances

The way you manage your credit cards can significantly influence your credit repair journey. One key factor to consider is your credit utilization ratio—the percentage of available credit you’re using. A high credit utilization ratio can raise red flags for lenders and negatively impact your credit score. Reducing your credit utilization ratio is a smart move to improve your financial standing.

As a general rule of thumb, aim to keep your credit utilization below 30%. If your credit cards are maxed out or close to their limits, it’s time to take action. Focus on paying down your debt and keeping your credit card balances as low as possible.

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 Posted on June 16, 2023 by

 Financial Education, Financial Literacy, First-Time Homebuyers, Home Financing, Loan Options

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5 Ways To Boost Your Home Buying Power

homebuyers complete their application to boost their home buying power.

Are you dreaming of owning your own home, but struggling to afford it with today’s interest rates and home prices? Unfortunately, many homebuyers are currently in the same position. You can either put off buying a home until interest rates or home prices come down. But this market shows no signs of slowing. Or you can start the process of boosting your home buying power. From improving your credit score to saving a larger down payment, these tips will help you make the most of your buying potential.

see how much home you can afford

Understanding Your Home Buying Power

When determining how much home a buyer can afford mortgage lenders consider several crucial factors. Including buyers’ income, their credit history and score, their debt, and the amount of their down payment. Lenders also consider current interest rates and the specific loan program for which the buyer is applying. By evaluating these elements, lenders can provide buyers with an accurate assessment of their purchasing power and the mortgage amount they can handle.

Improve Your Credit Score

Boosting your credit score is a game-changer. A higher credit score not only improves your chances of home loan approval but can also qualify you for a lower rate. By paying bills on time, reducing debt, and correcting errors on your credit report, you can elevate your credit score and unlock better loan terms for your home financing.

Save For A Larger Down Payment

Saving a larger down payment can significantly enhance your home buying power. Saving more upfront cash, you can reduce your loan amount. This lowers your monthly mortgage payments and potentially qualifies you for better interest rates. Additionally, a bigger down payment shows financial stability and lowers the risk for lenders, increasing your chances of loan approval. For ways on saving a down payment check out Savvy Ways To Save A Downpayment.

Increase Your Income

Increasing your income is a powerful tool for growing your home buying power. Whether it’s through a raise, promotion, or pursuing additional income streams, a higher income expands your borrowing capacity and boosts your affordability. Invest in your skills, seek opportunities for growth, and watch your home buying power soar.

Reduce Your Debt

Paying down debt is a vital step in increasing your home buying power. By reducing your debt-to-income ratio, you demonstrate greater financial stability to lenders and improve your chances of loan approval. Moreover, lower debt levels free up more of your income for mortgage payments, allowing you to afford a higher-priced home. Prioritize debt repayment to elevate your home buying power and pave the way to homeownership.

Explore First-Time Homebuyer Programs and Grants

First-time homebuyer grants and down payment assistance programs can be game-changers in boosting your home buying power. These financial resources provide crucial support by offering funds to cover a portion of your down payment or closing costs. By taking advantage of these programs, you can lower your upfront expenses, increase your affordability, and potentially qualify for a larger mortgage. Explore available grants and assistance options to maximize your purchasing potential can making home buying possible.

Negotiate a Seller Credit To Buy Down The Mortgage Rate.

Negotiating a seller credit to buy down the mortgage rate can have a significant impact on your home buying power. By requesting the seller to contribute towards buying down your mortgage rate you can lock in a lower monthly payment. This credit can also result in long-term savings increasing your overall affordability. Talk to your real estate agent about how to leverage a seller’s credit to enhance your purchasing power in the housing market.

In conclusion, by implementing these strategies, you can effectively increase your home buying power. Whether it’s improving your credit score, saving a higher down payment, increasing your income, or leveraging assistance programs, each step contributes to your purchasing potential. Take proactive steps, make informed financial decisions, and watch your home buying power grow, bringing you closer to your dream home.

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 Posted on June 15, 2023 by

 Down Payment, Financial Education, Financial Literacy, First-Time Homebuyers, Home Financing, Homebuyer Education, Homebuying Tips, Loan Options

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Down Payment Assistance Programs: What Homebuyers Need to Know

renters educate themselves as to if they should rent vs buy with a online homebuyer education program.

When it comes to purchasing a home, one of the biggest obstacles for many buyers is saving the down payment. While conventional wisdom dictates that a down payment should be 20% of the purchase price, this is not always realistic for everyone. Fortunately, down payment assistance programs are available to help mitigate this hurdle. In this article, we’ll explore the ins and outs of these programs, how to find and apply for them, and dispel some common myths.

Understanding Down Payment Assistance Programs

Buying a home is a significant investment and coming up with the down payment can be a major obstacle. Fortunately, there are down payment assistance programs available to help buyers achieve their dream of homeownership.

What is a Down Payment Assistance Program?

A down payment assistance program is a type of program that can help buyers cover costs associated with a home purchase. These programs are available by a variety of entities, from state and local governments to non-profit organizations and even employers.

One example of a down payment assistance program is the Homeownership Opportunity Program (HOP) offered by the California Housing Finance Agency. This program provides eligible first-time homebuyers with up to 3% of the purchase price of the home in down payment assistance.

Types of Down Payment Assistance Programs

There are several types of down payment assistance programs that buyers can take advantage of. Some programs offer grants, which do not need to be paid back, while others offer loans that do need to be paid back over time.

For example, the Michigan State Housing Development Authority offers a down payment assistance loan of up to $7,500, which is repayable over a 10-year term at 0% interest.

Another type of program is a match savings program. In this type of program, the buyer saves money towards their down payment and the program matches those savings. This effectively doubling the homebuyers cash toward their down payment.

For example, the Individual Development Account (IDA) program offered by the United Way of Greater Los Angeles provides a 2:1 match for every dollar saved, up to a maximum of $6,000. This means that if a buyer saves $3,000, the program will provide an additional $6,000 in down payment assistance.

Eligibility Requirements for Assistance Programs

Each down payment assistance program will have its own set of eligibility requirements. Generally, buyers will need to meet certain income limits, have good credit, and attend a homebuyer education course. Some programs may also have additional requirements, such as being a first-time homebuyer or purchasing a home in a certain area.

For example, the City of Chicago’s Home Buyer Assistance Program requires that buyers have a credit score of at least 640, attend a homebuyer education course, and purchase a home within the city limits. In addition, the program provides up to $7,500 in down payment assistance to eligible buyers.

It’s important for buyers to research the eligibility requirements for each program they are interested in and make sure they meet the criteria before applying.

Overall, down payment assistance programs can be a valuable resource for buyers who need help with their down payment. By taking advantage of these programs, buyers can achieve their dream of homeownership and build equity in their own home.

Benefits of Down Payment Assistance Programs

Lower Initial Costs

One of the most obvious benefits of down payment assistance programs is that they can lower the initial costs associated with buying a home. Without these programs, many potential buyers may be unable to afford the down payment, leaving them unable to purchase a home or delaying the purchase until they can save up the necessary funds.

Increased Homeownership Opportunities

By making homeownership more affordable, down payment assistance programs can help increase opportunities for people to become homeowners. This can be especially valuable for individuals and families who may not have considered homeownership a possibility due to financial constraints.

Financial Stability and Flexibility

Homeownership can provide a level of financial stability and flexibility that renting cannot offer. By allowing more people to become homeowners, down payment assistance programs can help stabilize local communities and create long-term financial benefits for those who participate.

How to Find and Apply for Down Payment Assistance Programs

Buying a home can be an exciting and rewarding experience, but saving up for a down payment is a challenge. Fortunately, there are many down payment assistance programs available to help make homeownership more affordable. Here’s a step-by-step guide on how to find and apply for these programs.

Researching Available Programs

The first step in finding down payment assistance programs is to research what programs are available in your area. This can be done by contacting your local housing authority or non-profit housing organization, or by doing an online search for programs in your state or local area.

It’s important to note that not all programs are the same. Some may have specific eligibility requirements, such as income limits or location restrictions. Others may offer different levels of assistance, such as grants or loans. Take the time to research and compare programs to find the one that best fits your needs.

Additionally, some programs may require you to attend a homebuyer education course before you can apply. These courses can provide valuable information on the homebuying process, including budgeting, credit management, and mortgage options.

Preparing Necessary Documentation

Once you’ve identified a program you’re interested in, you’ll need to gather the necessary documentation to apply. This may include things like income verification, proof of employment, and credit reports.

It’s important to start gathering these documents early, as the application process can take time. You may also want to consider getting pre-approved for a mortgage before applying for down payment assistance. This can help you determine how much assistance you’ll need and make the application process smoother.

Navigating the Application Process

The best way to see what programs are available to you is to work with an expert. Our Savvy mortgage specialists will review your situation and provide you with a list of options. To speak with a mortgage and down payment assistance expert complete this quick Buyer Power Approval™.

Once we’ve identified which programs you should apply for you will complete an application to the program and submit any needed documentation. Be prepared to follow up with the program administrator to provide additional information if needed.

It’s important to note that the application process can take time, so be patient. Some programs may have a waiting list or limited funding, so it’s important to apply as soon as possible.

Once you’ve been approved for assistance, you’ll typically receive the funds at closing. This can help reduce your out-of-pocket expenses and make homeownership more affordable.

Overall, down payment assistance programs can be a valuable resource for first-time homebuyers or those who may be struggling to save for a down payment.

Common Down Payment Assistance Program Myths and Misconceptions

Myth: Assistance Programs are Only for First-Time Homebuyers

Down payment assistance programs target first-time homebuyers. Many programs are available to all homebuyers, regardless of whether or not they have owned a home before.

Myth: You Must Have a Low Income to Qualify

While many programs do have income limits, these limits can vary widely depending on the program and location. It’s always worth researching programs in your area to see if you qualify.

Myth: Down Payment Assistance Programs are Too Good to Be True

Down payment assistance programs may seem too good to be true, but they are a great tool for aspiring homeowners. Want to know what programs may be available to you? Complete our quick Buyer Power Approval and our team will gather options that fit your needs.

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 Posted on June 2, 2023 by

 Down Payment, Financial Literacy, First-Time Homebuyers, Homebuying Tips

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The Best Monthly Mortgage Calculator

Monthly Mortgage Calculator: Happy homebuyer is smiling holding a piece of paper that tells her how much home she can afford.
Curious what your monthly mortgage payment look like?

When it comes to purchasing a home, one of the most significant financial decisions you will make is selecting the right mortgage. With numerous factors influencing your monthly payment, understanding how much you can afford and finding the best option for your budget can be overwhelming. That why using an accurate monthly mortgage calculator can be a helpful place to start!

Savvy Mortgage Calculator

Input

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Monthly Mortgage Payment

Understanding Mortgage Payments

Buying a home is a big investment, and understanding the different components of your monthly mortgage payment is crucial to managing your finances. In addition to the principal and interest, there are several other factors that contribute to your overall payment.

Principal and Interest

As mentioned, the principal is the amount of money you borrowed to purchase your home. The interest is the cost of borrowing that money, and it is calculated based on your loan amount, interest rate, and loan term. It’s important to note that the interest rate can have a significant impact on your monthly payment. Even a small difference in interest rates can result in a significant difference in your monthly payment and the total amount of interest you pay over the life of your loan.

One strategy to lower your interest rate is to make a larger down payment. This will reduce the amount of money you need to borrow and can result in a lower interest rate. Another strategy is to shop around for different lenders and compare their interest rates and terms.

Property Taxes

In addition to principal and interest, homeowners are responsible for paying property taxes. These taxes are collected by the local government and help fund public services like schools and emergency services. The amount of property tax you pay will depend on your location and the value of your home. It’s important to budget for property taxes and be aware that they can increase over time.

Homeowners Insurance

Homeowners insurance is another important component of your monthly mortgage payment. This type of insurance covers damages or losses to your home and personal property. It also provides liability coverage in case someone is injured on your property. Having homeowners insurance is generally a requirement when you take out a mortgage to purchase a home.

When choosing a homeowners insurance policy, it’s important to shop around and compare different options. Consider factors like the level of coverage, deductible amount, and cost. You may also be able to save money by bundling your homeowners insurance with other types of insurance, like auto insurance.

Private Mortgage Insurance (PMI)

If your down payment is less than 20% of the home’s purchase price, you may need to pay for private mortgage insurance in addition to your monthly mortgage payment. PMI provides protection for the lender in case you default on your loan. While PMI can add to your monthly payment, it can also make it possible for you to buy a home with a smaller down payment.

It’s important to note that once you have paid down your mortgage balance to 80% of your home’s original appraised value, you may be able to cancel your PMI. This can result in a significant reduction in your monthly payment.

By understanding the different components of your monthly mortgage payment, you can better manage your finances and make informed decisions about your home purchase. Remember to shop around for the best interest rates and insurance policies, and budget for property taxes and other expenses.

Benefits of Using a Mortgage Calculator

Buying a home can be a daunting task, especially when it comes to figuring out how much you can afford. Fortunately, we can estimate what your monthly mortgage payments will look like with basic information about the type of home youre looking to buy. can help make this process easier. Here are some of the benefits of using a mortgage calculator:

Accurate Monthly Payment Estimates

One of the most significant advantages of using a mortgage calculator is that it can give you a precise estimate of your monthly payment. This tool considers all the factors that affect your payment, such as the loan amount, interest rate, and loan term, so you know exactly how much to expect. This can help you budget your finances more effectively and avoid any surprises down the line.

Compare Different Loan Options

With a payment calculator, you can input different loan terms and interest rates to see how they impact your monthly payment. Being able to compare options side by side can help you make a more informed decision about your mortgage. For example, you can see how a 15-year mortgage compares to a 30-year mortgage in terms of monthly payments and total interest paid over the life of the loan.

Plan Your Home Purchase Budget

Knowing how much you can afford is crucial to planning your home purchase budget. Using a mortgage calculator can help you determine how much you can afford based on your income and other expenses. It takes into account your down payment, loan amount, interest rate, and loan term to give you an accurate estimate of your monthly payment. This can help you avoid overextending yourself financially and ensure that you can comfortably afford your mortgage.

Determine the Impact of Extra Payments

If you plan on making extra payments towards your mortgage, a mortgage calculator can help you visualize the overall impact of those payments. You can see how much you could save in interest, shorten your loan term, and own your home outright faster. This can help you decide whether or not making extra payments is the right choice for you and your financial goals.

Overall, a mortgage calculator is an essential tool for anyone looking to buy a home. It can help you make informed decisions about your mortgage, budget your finances more effectively, and plan for the future. So if you’re in the market for a new home, be sure to take advantage of this valuable resource.

How to Use a Mortgage Calculator

Buying a home is one of the most significant financial commitments you will make, and it is essential to make informed decisions throughout the process. One tool that can help you do this is a mortgage calculator. Here’s how to use one:

Input Your Loan Information

The first step to using a mortgage calculator is entering your loan information, such as loan amount, interest rate, and loan term. However, it’s crucial to ensure that the information you provide is accurate. For instance, if you’re not sure about the interest rate, you can reach out to your lender to get a precise figure. This information will help determine your monthly payment, which is a crucial factor when considering a mortgage.

Adjust Loan Terms and Interest Rates

Once you’ve entered your loan information, you can adjust your loan term and interest rate to see how they impact your monthly payment. It’s essential to note that longer loan terms generally result in lower monthly payments but may require paying more interest over time. On the other hand, shorter loan terms require higher monthly payments but have lower interest charges. Thus, it is essential to weigh the pros and cons of each option and choose the one that best suits your financial situation.

Review Your Monthly Payment Breakdown

A mortgage calculator will provide a breakdown of your monthly payment, including principal, interest, property taxes, and homeowners insurance. Understanding how your monthly payment is divided is crucial as it helps you determine how much you can afford to spend on a home. For instance, if you find that property taxes and homeowners’ insurance are too high, you may need to consider a less expensive home or look for ways to reduce these costs.

Analyze Amortization Schedule

Finally, a mortgage calculator will generate an amortization schedule that displays how much interest and principal you will pay for your loan each month. This schedule can help you understand how much equity you are building over time. Additionally, it can also help you determine whether refinancing your loan is a viable option in the future.

Using a mortgage calculator can significantly streamline the home buying process and help you make informed decisions. However, it’s crucial to remember that a mortgage calculator is just a tool, and there are other factors to consider when buying a home, such as your credit score, debt-to-income ratio, and down payment. Ensure you input accurate information to achieve the best results possible and feel confident in your final decision.

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 Posted on June 1, 2023 by

 Financial Literacy, Home Financing, Mortgage Process

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How to Get the Best Mortgage for Your Needs

happy couple holding and showing a house key

Buying a home is a major milestone in life. But for most people, getting a mortgage can be a daunting task. The process can be complicated and with so many types of loans available. To help you navigate the mortgage market and get the best deal for your needs, we’ve put together this guide.

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Understanding Different Types of Mortgages

Before you start your search, it’s important to understand the different types of mortgages that are available. Each type of loan has its own set of pros and cons. What may be right for one person may not be the best option for another.

When it comes to buying a home, the process can be overwhelming. From finding the right property to securing financing, there are many factors to consider. One of the most important decisions you’ll make is choosing the right type of home loan.

Conventional Loan

A conventional loan is a mortgage that is not insured or guaranteed by the government. These loans typically require a higher credit score and a larger down payment than government-backed loans. However, they may have more flexible lending requirements and lower interest rates, depending on the lender.

Conventional loans are a good option if you have a strong credit score and a steady source of income. They are also a good choice if you plan to stay in your home for a longer period of time. Conventional home loans offer stability and predictability when it comes to your monthly payment.

FHA Loan

An FHA loan is a government-backed mortgage that is insured by the Federal Housing Administration. These loans are popular among first-time homebuyers because they have lower down payment requirements and more flexible credit score requirements. However, they also come with mortgage insurance premiums that can add to the cost of your monthly payment.

FHA loans are a good option if you have a lower credit score or a smaller down payment. They can also be a good choice if you are a first-time homebuyer and are looking for a more affordable option to get into the housing market.

VA Loan

A VA loan is a mortgage that is guaranteed by the Department of Veterans Affairs. These loans are available to eligible veterans, active-duty service members, and their surviving spouses. They typically require no down payment and have more flexible credit and income requirements than conventional loans. However, they may require a funding fee and have certain restrictions on the types of properties you can purchase.

VA loans are a good option if you are a veteran or active-duty service member looking to buy a home. They offer a number of benefits, including no down payment and more flexible lending requirements. However, it’s important to note that they may have certain restrictions on the types of properties you can purchase, so it’s important to do your research before applying.

USDA Loan

A USDA loan is a government-backed mortgage that is guaranteed by the United States Department of Agriculture. These loans are designed to help low- to moderate-income borrowers in rural areas purchase homes. They offer low interest rates, no down payment, and flexible credit requirements. However, they also have certain eligibility requirements based on income and property location.

USDA loans are a good option if you are looking to purchase a home in a rural area and meet the income and property location requirements. They offer a number of benefits, including no down payment and low interest rates, making them an affordable option for many borrowers.

Adjustable-Rate Mortgages (ARMs)

An adjustable-rate mortgage, or ARM, is a type of loan that has an interest rate that can change over time. These loans typically start with a lower interest rate than fixed-rate mortgages. However, it is important to know that they can also increase over time, potentially resulting in a higher monthly payment. ARMs are a good option if you plan to sell or refinance your home within a few years, but they may not be the best choice for long-term homeownership.

ARMs are a good option if you are looking for a more affordable option in the short term. However, it’s important to note that they can be riskier in the long term, as your monthly payment can increase over time. If you plan to stay in your home for a longer period of time, a fixed-rate mortgage may be a better option.

Fixed-Rate Mortgages

A fixed-rate mortgage is a type of loan that has a set interest rate for the entire term of the loan. They offer the security of knowing that your monthly payment will not change, regardless of changes in market interest rates. They are a good option if you plan to stay in your home for a longer period of time.

Fixed-rate mortgages are a good option if you are looking for stability and predictability in your monthly mortgage payment. They offer peace of mind, knowing that your payment will not change over the life of the loan. They are also a good choice if you plan to stay in your home for a longer period of time, as they offer long-term stability.

Assessing Your Financial Situation

Once you have a basic understanding of the types of loans available, the next step is to assess your own financial situation. This will help you determine which loan is the best fit for you.

Evaluating Your Credit Score

Your credit score is one of the most important factors that lenders consider when deciding whether to approve your application. Check your score before you start shopping for a loan, and take steps to improve it if necessary. A higher credit score can make it easier to qualify for a loan and may result in a lower interest rate.

Determining Your Debt-to-Income Ratio

Your debt-to-income ratio, or DTI, is another important factor that lenders consider. This is the percentage of your monthly income that goes toward paying off existing debt. Aim for a DTI of 43% or lower – the lower your DTI, the more likely you are to be approved for a loan.

Saving for a Down Payment

A down payment is the amount of money you pay upfront when you buy a home. Most loans require a down payment of at least 3% to 20% of the purchase price. Save up as much as you can to reduce the size of your loan and lower your monthly payments. Learn about more creative ways to save a down payment here.

Estimating Your Budget

Before you start shopping for a loan, it’s important to have a clear idea of what you can afford. Use a budgeting tool to estimate your monthly expenses, including your mortgage payment, property taxes, and insurance. This will help you determine how much you can afford to borrow.

Shopping for the Best Loan Terms

Once you have a clear understanding of your financial situation and the types of loans available, it’s time to start shopping for the best loan terms. Here are some key things to consider:

Comparing Interest Rates

Compare interest rates from multiple lenders to find the best deal. A lower interest rate can save you thousands of dollars over the life of your loan.

Understanding Loan Fees and Closing Costs

Loan fees and closing costs can add up quickly. Make sure you understand what each fee is for and negotiate with your lender to see if you can get them reduced.

Evaluating Loan Term Lengths

Loan term length can have a big impact on your monthly payment and total interest paid. Shorter loan terms may have higher monthly payments but can save you money in interest over the life of the loan.

Considering Prepayment Penalties and Other Loan Features

Finally, make sure you understand all the features of your loan, including prepayment penalties, balloon payments, and adjustable interest rates. These features can have a big impact on your finances, so make sure you’re comfortable with them before you sign on the dotted line.

By following these steps and doing your research, you can find the best home loan for your needs and budget. Don’t be afraid to ask questions or negotiate with your lender to get the best deal possible. With the right mortgage, you can achieve your dream of homeownership.

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 Posted on May 31, 2023 by

 Down Payment, Financial Literacy, Home Financing, Mortgage Process, VA Home Loan

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Ultimate First Time Homebuyer Tips

First Home: Homebuyers enjoy playing in their new living room. Pushing each other around in moving boxes after buying their first home.

Buying a home is one of the biggest purchases of your life, which can be somewhat overwhelming. Over the last 5 years, we have helped thousands of aspiring home buyers to buy their first homes. Here are the ultimate tips that every first-time homebuyer should know before buying a home:

Speak With A Mortgage Expert ASAP

Getting pre-approved for a home loan can be the most intimidating parting of being a first-time homebuyer. But unless you are purchasing a home cash it is important to know what your home loan options will be. A mortgage expert will walk you through what loans are available to you. They will explain to you what mortgage interest you can expect, and how much money you will need for your down payment and closing costs.

Take it from us… DO NOT WAIT. To connect to one of our mortgage experts complete our quick Buyer Power Approval™, no credit pull, questionnaire.

First-Time homebuyers speak with a mortgage professional to see what they can afford and what type of home loan works for them.

Understanding First-Time Homebuyer Financing Options

Loans for first-time homebuyers typically offer favorable interest rates and terms. They are designed to make homeownership more accessible and affordable for those entering the housing market for the first time.

There are 3 financing options that every first-time homebuyer should know about. They offer the opportunity to buy with little to no money down and even offer incentives for people buying their first home.

FHA Loan

The FHA loan is a powerful financing tool for first-time homebuyers due to its low down payment requirement. The down payment can be as low as 3.5% of the purchase price. Additionally, the FHA loan program offers more flexible qualification criteria, making it easier for individuals with lower credit scores or limited credit history to obtain a mortgage and achieve their goal of homeownership.

$0 USDA Loan

The USDA loan is a powerful financing tool for first-time homebuyers due to its unique feature of offering 100% financing, meaning no down payment is required. Additionally, the USDA loan program provides affordable interest rates and relaxed credit requirements, making it an attractive option for individuals with limited financial resources or lower credit scores who are seeking to purchase a home in eligible rural areas.

First-Time Homebuyer Grants and Down Payment Assistance

The down payment assistance program and homebuyer grants are powerful financing tools for first-time homebuyers as they provide financial support to help bridge the gap between the down payment and the purchase price of a home. These programs can significantly reduce the upfront costs, making homeownership more attainable for individuals who may struggle to save a large sum of money for a down payment, ultimately opening doors to homeownership and fostering economic stability.

Know how much down payment you’ll need

Once you speak with a mortgage expert you’ll need to have a savings account with enough money to cover closing costs and inspection fees. In most cases, you’ll need to have a down payment to get a loan; which is a certain percentage based on your loan amount. Your mortgage expert can give you a ballpark figure of all of the out-of-pocket fees you might have once they pinpoint your budget range. However, it is important to know that a lot of the inspections & closing costs will be out-of-pocket. Check out our savings tips for first-time homebuyers.

You Have a Good Credit Score

First-time homebuyer researches their current credit score to see if they will be able to buy a home.

Knowing your credit score ahead of time is important. Sites like Credit Karma offer free credit reports. You can also check your mobile bank app, which often includes a snapshot of what your current credit looks like. If you do have small credit issues speak with your mortgage expert and they can make recommendations to improve your credit. Do not try to fix your credit without professional guidance. This could be a waste of time, energy, and resources. Connect with a mortgage expert to get a copy of your credit report and create a path to improvement.

Have a Good Real Estate Agent

Your choice of agent will have a massive impact on your overall success as a first-time homebuyer. A great real estate agent will make sure you feel comfortable, take you through the steps of home buying, and encourage you to ask questions any time you have one. So you either need to know How Interview your real estate agent, check out the step by step guide. Or you can be connected with your local Savvy Homebuying expert, who we have vetted for your area.

Once you have selected an agent make sure they know exactly what you’re looking for by making a list of must-haves, negotiables, and deal breakers. This list can set the expectations for homes that you want to see.

Consider the Future

Don’t purchase a house to solve a short-term problem. You would just be setting yourself up to have to move in a couple of years. When touring homes consider what life will look like 5-7 years from now. Is this home still a good fit when your family grows? Will you still enjoy the neighborhood when the new street gets put in? How will the commute feel after a month or two?

Is there anything about this home that would make it difficult to sell or rent in the future if you needed to do so? These are all great tips for first-time homebuyers so you don’t purchase something that only works for you for a short period of time.

Choose the Right Neighborhood

Typically, homebuyers are interested in schools, commute, crime, and access to local amenities when choosing the right neighborhood for them. Has the neighborhood had any problems with crime? We highly recommend researching local crime maps to get a better idea of the type of incidents taking place in your favorite neighborhoods.

Is it easy to get to the highway if you have a commute for work? Ask yourself these important questions before you choose the area where you’d like to live.

Plan For Additional Costs 

Here are some recurring costs you will want to factor in when you purchase a new home:

  • Property Taxes
  • Utility Bills
  • Homeowner’s Insurance (possible flood or hurricane insurance if you are in a high-risk area)
  • Mortgage Insurance
  • Home Maintenance

Check Homeowner Insurance Prices 

Insurance prices depend on a number of factors so it’s best to reach out to your insurance company ahead of time or speak to your agent to see if the home is in a high-risk zone. Flood and hurricane insurance is actually required in certain areas, so you may have no choice but to pay higher premiums depending on your location. A great tip for first-time home buyers is to ask your mortgage provider which insurance companies they have seen offer great rates recently. Lenders are at the forefront of these fees and can recommend different places to shop that you may not have considered.

Get A Home Inspection 

We highly recommend that you get your potential new home inspected. A certified home inspector will examine the home and create a detailed report of their findings. The inspection report will provide you with detailed information on the condition of the home and give you an idea of areas that will require your attention or repair in the future. Here is a rundown of problems to look for in the report before buying the home. Often you can negotiate with the seller to handle some of these items before you close on the purchase of the home.

first-time homebuyer meets with home inspector to review their inspection report.

Buy The Home Warranty

Even though inspections will show you existing issues with a home a home warranty can protect you against significant costs in your first year of homeownership. Defense is the new offense! While a home warranty may cost $400-$600 depending on the home it can EASILY pay for itself in the event of 1 MINOR home repair.

In conclusion, buying your first home is an exciting and significant milestone. By following these top 10 tips for first-time homebuyers, you can navigate the process with confidence and make informed decisions. Remember to prioritize your budget, conduct thorough research, seek professional guidance, and stay organized throughout the journey.

With careful planning and preparation, you can find the perfect home that meets your needs and aspirations. Happy house hunting!

 3 Comments

 Posted on May 26, 2023 by

 Down Payment, Financial Literacy, First-Time Homebuyers, Home Financing, Homebuying Tips, Real Estate Agent

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Savvy Ways To Save For A Down Payment

couple sits infront of a piggy back discussing different ways to save for their down payment.

Are you dreaming of owning your own home but struggling to save up for the down payment? Don’t worry, we’ve got you covered! In this blog post, we’ll explore some creative and effective ways people are saving for their downpayment. Get ready to be inspired and motivated to take action toward achieving your homeownership goals.

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Creative ways to save for your first home!

Bi-Weekly Savings Challenge:

One popular strategy is the bi-weekly savings challenge. Instead of saving monthly, divide your down payment goal by the number of bi-weekly paychecks in a year. Set up automatic transfers into a dedicated savings account on each payday, and watch your down payment savings grow faster than you ever imagined.

Real estate agent reviewing how much a first-time home buyer needs to save for a down payment.
Family moving into their first home after using savvy ways to save their down payment.

The Envelope Saving Strategy:

If you prefer a more tangible approach, try the envelope-saving strategy. Label envelopes with different expense categories and allocate a portion of your income towards each one. By diligently saving a set amount in the “Down payment” envelope, you’ll see your progress visually and stay motivated to reach your goal.

It is important to know most First-Time Homebuyers make a mistake by NOT speaking with a qualified mortgage professional about their homebuying goals. This can make the process of saving and preparing to buy a home feel confusing and frustrating. Take 60 seconds to complete our ovalThe $1000 Saving Challenge:

Looking for a fun and achievable down payment savings challenge? Try the $1000 saving challenge. Start by saving $1 on the first week, $2 on the second week, $3 on the third week, and so on, until you reach $52 on the final week. By the end of the year, you’ll have saved $1,378 toward your down payment!

Embrace Frugality:

Cutting back on unnecessary expenses and embracing frugality can significantly boost your down payment savings. Consider packing your lunch, brewing your own coffee, canceling unused subscriptions, and shopping smart by using coupons and seeking out deals. Every dollar saved adds up!

Increase Your Income:

If you’re eager to accelerate your savings, explore opportunities to increase your income. Take on a side hustle, freelance work, or find ways to monetize your skills and passions. By diversifying your income streams, you’ll have more money to put toward your down payment.

Explore 0% Down Homebuying Loans

It is important to know that both the VA Home Loan and USDA Home Loans require 0% down. This does not mean it costs no money to use these mortgage programs. The buyer is still responsible for some casts, but they can alleviate the stress of saving for the down payment.

Explore Down Payment Assistance Programs

Additionally, downpayment assistance programs are designed to help individuals and families overcome the hurdle of saving for a downpayment on a home. These programs provide financial assistance, grants, or low-interest loans that can be used towards down payment or closing costs. The availability of these programs varies by state, with options available in nearly every state across the country.

Happy couple reviewing their down payment savings plan for their first-home.

Savings for a home is a journey.

All in all, saving for a downpayment may seem challenging, but with the right strategies and mindset, you can make it happen. Whether you choose the bi-weekly savings challenge, envelope strategy, or the $1000 saving challenge, remember that every step counts towards your homeownership dreams. Stay focused, track your progress, and celebrate each milestone along the way. You’ve got this!

Start your savings journey today and take the first step towards owning your dream home. Are you ready to embrace the challenge? What do you think? Share your progress with us in the comments and let’s cheer you on!

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 Posted on June 29, 2020 by

 Down Payment, Financial Literacy, First-Time Homebuyers, Homebuying Tips

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Savvy Homebuyer