Purchasing your first home is a major milestone and requires some preparation and patience. Just getting started in the process? Here are five tips that first-time homebuyers in OH, IN and MI should consider.
1. Figure out how much home you can afford
A great place to start is our mortgage calculator to get a high-level estimate of what your mortgage payment may be. Remember to account for taxes, PMI, your down payment, closing fees and home insurance. Fannie Mae recommends spending only 28% of your income on your home, but ultimately you need to decide what makes you comfortable. A house payment that causes stress doesn’t make for a home you will love. Get tips from our article, How Much Home Can I Afford.
2. Include closing costs in your budget
Closing costs are typically 2-5% of your mortgage loan amount. According to BankRate’s annual closing costs survey, that comes out to an average of $2,031 in Ohio. It’s a good idea to get an understanding of how much you’ll need to set aside or finance to close on your home and add that in to your overall budget. Visit our blog on closing costs to go into this in more depth.
3. Gather your paperwork & get pre-approved
Applying for a mortgage involves a lot of paperwork. Get organized by checking out our list of mortgage application documents. Also, get started on the pre-approval and pre-qualification process so that sellers will know you are serious when you are ready to make an offer.
4. Get your credit in line
It’s good practice to pull your free annual credit report if you are in the market to buy a home because the higher your credit score, the lower the interest rate on your home loan. Find out if there are any errors and take the time to resolve any issues. If needed, visit our blog outlining how to increase your credit score before you get too far in the process.
5. Find out if you qualify for any tax breaks
In addition to federal and state programs for first-time and prospective homebuyers, there are several tax credits you may be able to take advance of, like the mortgage interest credit, energy efficiency credits, and lower-income housing credits.
Ready for more? Download our homebuyers guide and come in to speak with your local mortgage lender. Know that First Federal Bank is here to help guide you at every step along your journey to homeownership. We are truly Better Together.