Buying your first home is an exciting time in one’s life. Perhaps you’ve just gotten married or started a family, and you’re confident that now is the right time to purchase a home. At American Loans & Mortgages in Salt Lake City, we can help you find the perfect financing for your new home. We know that you likely have lots of questions regarding financing and choosing the right home, which is why we’ve created this guide to help you on your journey to owning a home.
What’s Your Financial Situation?
If you’re ready to start looking at homes, the first thing you need to consider is your financial situation. Have you been saving for a down payment on your first home? Do you have an emergency fund of three to six months that can help with living expenses and other costs that go into purchasing a new home? It’s imperative to be prepared not only for the purchase of your home, but the expenses required to cover utilities, upgrades, and any unforeseen costs.
You’ll also want to review your spending and check your credit score. A lender is going to want to see good credit before you can qualify for a home loan, and your debt-to-income ratio (the percentage of your gross monthly income that goes towards paying your monthly debt payments and is used to determine your borrowing risk) will need to be in the ideal range in order to secure the loan you need.
Do You Qualify as a First-Time Homebuyer?
If this home will be the first house you’ve ever purchased on your own or with your new partner, then you will qualify as a first-time homebuyer. However, there are other instances where you can qualify as a first-time buyer, even if you’ve owned a home in the past. For example, a first-time homebuyer can be:
- Someone who has not owned a principal residence for three years. If you’ve owned a home, but your partner has not, you can purchase a house together as first-time homebuyers.
- Someone who is a single parent and who has only owned a home with a former spouse while married.
- Someone whose primary residence has not been permanently attached to a foundation (such as a mobile home or RV).
There are other situations where individuals can qualify as first-time buyers, and it’s always a good idea to talk to your lender about your status and what assistance programs you can take advantage of, should you be able to purchase a home as a first-time buyer.
What Type of Home Do You Need?
When you think of buying a home, you might immediately imagine a single-family house on a nice, tree-lined street or cul-de-sac. While this is a perfectly good option, it’s important to be realistic about what type of home you need and what type of home you can afford. If you are set on a single-family, detached residence, then set your financial goals to go for that. However, there are plenty of other home options available, including condominiums, townhomes, duplexes, and more. Your budget and financial situation might be more ideal for a smaller, attached residence, and it’s a good idea to keep your options open.
What Do You Need to Know About Mortgages and Down Payments?
If this home will truly be the first home you’ve purchased, then you’ve likely never looked too much into mortgages and down payments. It’s important to know that not all mortgages are the same, and options will vary from lender to lender. Your credit score will affect how much you can borrow, and the down payment amount can change based on the loan you choose. There are options for first-time homebuyers to reduce their down payment amount, so be sure to talk to your lender about this.
Buying a home can be very exciting, but it can also be stressful. At American Loans and Mortgages, we can help you find the right choice for your first home. Contact us today to learn more!