10 Home Buying Tips for First Time Buyers

Helpful tips graphicIf you have previously purchased a house, you know what lies ahead. However, you have questions if you're a young first-time home buyer.

You probably have friends or relatives who are anguished over the mortgage process. The reason is perhaps due to inadequate preparation on their part or the failure of the mortgage loan officer to prepare them properly. So here are some tips to make the mortgage application and home buying uneventful.

The best advice for first-time house buyers

  1. Get your free credit report!
  2. Get your papers in order!
  4. Find a lender who uses the rapid rescore program in conjunction with a credit simulator.
  5. Ask the seller about the cost of their homeowner's insurance policy before making an offer!
  6. Find out if the house requires flood insurance.
  7. Get an estimate of the closing costs before making an offer.
  8. Get a home inspection with hazardous substance testing
  9. Seek out a first-time home buyer program.
  10. Be careful when shopping for an interest rate.

1. Get your free credit report!

Experian, Equifax, and TransUnion are required by the Fair Credit Reporting Act (FCRA) to provide you with a free copy of your credit report every 12 months if you ask for one. Your credit report is accessible online, and it is quick and straightforward. If there aren't any issues, that's fantastic, but if there are, you'll find out before you go too far along in the home-buying process.

You might think I pay my bills on time; why should I bother?

Any seasoned mortgage loan officer will tell you that erroneous information and collection accounts are regularly on a consumer's credit report. Additionally, if there are errors in your credit report, this might hurt your credit score.

If you have a low credit score, it could be difficult for you to get a mortgage. It is difficult, to say the least, to correct an inaccurate credit report after qualifying for a mortgage.

What should I do if I find incorrect information on my credit report?

Contact the three credit reporting agencies right once to dispute any erroneous information you see on your report.
Credit bureaus are required by federal law to investigate a dispute within 30 days.

Directly contact each credit bureau by calling:

P.O. Box 740241
Atlanta, GA 30374-0241
(800) 685-1111
P.O. Box 2000
Chester, PA 19022
(800) 888-4213
P.O. Box 2002
Allen, TX 75013-0036
(888) 397-3742

Unless the loan officer specifically instructs you to do so, never cancel or pay off any credit cards, installment loans, or other debts.

Your credit score is based on various factors, including the amount of available credit, the number of open accounts, the age of the funds, and more.

You run the danger of reducing your credit score when you terminate accounts, which is something you do not want to happen. Additionally, applying for or opening new credit is a terrible idea.

2. Get your papers in order!

Woman staring at her papersWhen you make a loan application, the lender will ask you for:

  1. Your most recent pay stub(s) covering the last 4 weeks,
  2. bank and savings statements (all pages)
  3. 401(k) account statements (including the final page for check reconciliation),
  4. divorce and child support orders (if applicable), and
  5. divorce settlement agreements (if applicable)
  6. W-2s for the most recent two years
  7. Income tax returns for the past two years

The lender will need your employer's name, address, phone number, and employment dates for all employers.

3. Obtain a pre-approval rather than a pre-qualification.

Although the terms pre-approval and pre-qualification are frequently used interchangeably, they have two meanings.

Pre-qualification means that someone has looked through your finances (assets, income, and debt) and determined that you are qualified to buy a property in a specific price range.

Pre-qualification is nothing more than a "gut feeling" that you'll be approved for a loan.

A pre-approval includes verification of your income, debt, income, and credit score. The lender will look at your pay stubs, W-2s, bank records, and credit report.

The pre-approval has the appearance and feel of an actual mortgage application. The lender will review your W-2s, bank statements, current pay stubs, and other documents. The lender can assess the amount you can borrow and which loan program is "ideal" based on your financial circumstances once you've been conditionally accepted.

A lender's pre-approval letter outlining your financial qualifications is typically issued. A pre-approval letter is usually valid for 60 days.

After 60 days, the lender may request you update your bank statements and pay stubs. A genuine pre-approval gives you an advantage over other home buyers when you make an offer, and Pre-approval implies that you are likely to be approved for a loan.

4. Find a lender who uses the rapid rescore program in conjunction with a credit simulator.

Mortgage loan officer looking at his computer screenFind a lender that uses a fast rescore tool and a credit simulator.
After addressing any negative items on your credit report, you may raise your credit score quickly. Rapid rescoring is a topic that most lenders ignore since it costs them money.

A few more points may make the difference between getting the loan. A few issues might significantly impact your interest rate and loan program on your credit score.

Whether you like it or not, one aspect that affects your interest rate and, in certain situations, the loan programs open to you is your credit score. Some lenders may use credit score simulators and credit rescoring updates to raise your credit score.

5. Before making an offer, inquire about the cost of the seller's homeowner's insurance coverage.

You may be surprised to hear that the cost of homeowner's insurance might be impacted by an insurance claim made by the current owner.

You could be required to pay a higher premium due to the seller's claim if they made one with their homeowners' insurance provider.

Location, age, and architectural style are just a few examples of the variables that may significantly impact the price of a homeowner's insurance policy and its monthly cost. Ask about the insurer and agency the seller uses and how much it will cost to insure the house.

6. Find out if flood insurance is required for the home.

Did you know that if you own a home in a flood zone, lenders will require flood insurance?

Did you know that flood insurance costs on average, $750 per year?

Every month, that lovely little creek in the backyard might cost you an extra $100 on your monthly mortgage payment. Take a few minutes before making an offer on the house to determine if it is located in a region that requires flood insurance.
Did you know that if you own a home in a flood zone, lenders will require flood insurance?

Did you know that flood insurance costs on average $750 per year?

Every month, that nice little creek in the backyard might cost you an extra $100 on your monthly mortgage payment. Take a few minutes before making an offer on a house to determine if it is located in a region that requires flood insurance.

7. Before making an offer, get an estimate of the closing fees.

Before applying for a loan and making an offer on the house, ask the mortgage lender (or lenders) for a loan estimate. A loan estimate is a document that includes a breakdown of all the expenses related to buying a house.

8. Obtain a home inspection that includes a hazardous substance test.

Home inspector with home buyerHaving a professional inspect the house is unquestionably in your best interest. Still, you should also have a home inspection that includes asbestos, radon, mold, and other potentially harmful conditions.

You'll pay a bit more for testing but think about the repercussions if you (or someone in your family) get sick due to a dangerous condition.

9. Seek out a first-time home buyer program.

There are various programs for first-time home buyers. Some first-time (and non-first-time) programs provide grants to help with down payment and closing costs.

Speak to a HUD counselor to assist you with your purchase. First-time home purchasers can also get help from the Federal Reserve Banks.

Grants for first-time home buyers are available from the federal government.

10. When looking for an interest rate, be cautious.

The search for a cheap interest rate or loan program should be limited to a few days.

A "hard inquiry" occurs when a lender views your credit report in response to a credit application, and credit scores are affected by hard inquiries.

Applying for many credit accounts quickly can hurt your credit score and make lenders think you're a riskier borrower.

Furthermore, some credit-scoring models may consider your recent credit behavior. There is one exception.

If you are looking for a new car, mortgage loan, or a recent utility supplier, numerous inquiries for such purposes are generally regarded as one inquiry for a specific period (typically 14 to 45 days, although it may vary depending on the credit-scoring model).

This allows you to compare several lenders and determine which loan terms are best for you. It's vital to note that this exception doesn't usually apply to other sorts of borrowing, including credit cards.

Quick Recap

  1. Take a look at your free credit report
  2. Gather up your papers
  3. Get a pre-approval
  4. Will your lender use rapid rescore?
  5. Does the house lie in a flood plain?
  6. How much is the seller's homeowner's policy?
  7. Get a loan estimate from your lender before you make an offer
  8. Get a though home inspection
  9. Look for first time home buyer programs and grant money
  10. Be careful when shopping for an interest rate


In conclusion, private mortgage insurance is an integral part of the home-buying process. It allows buyers to purchase a home with less money down and protects lenders in the event of a default.

Knowing what it is and how it works can help buyers make more informed decisions when buying a home. Homeowners should compare different providers' costs, coverage, and rules before committing to private mortgage insurance. Doing so can save you money in the long run and provide more financial security.

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