Tips for First Time Home Buyers
First-time homebuyers need to remember that this is a long-term investment and, therefore, understanding the process and your options can help lower interest rates, which will ultimately save you thousands over the life of a 30 year mortgage.
Boston, MA (PRWEB) March 02, 2015
Purchasing a home is one of the most important and exciting life investments for an individual to make. In the wake of an economic recession, Americans are even more wary of becoming a first time homeowner. Although taking the plunge can be difficult, American Consumer Credit Counseling has these five tips to help first time home buyers prepare.
“Often times, individuals go into buying their first home blindly, and they get overwhelmed” said Steve Trumble, President and CEO of American Consumer Credit Counseling. “An investment this large can be scary, and also difficult at times, but there are ways for home buyers to prepare themselves and lower the risk to make the process a smooth one.”
Several changes have been made heading into the 2015 home-buying season to attract first-time home buyers to the market and make home ownership more accessible. Wells Fargo, for example, has cut back on a number of borrower requirements by reducing the minimum credit score for certain loans, increasing the amount of “gift money” allowed, and offering two types of three percent down mortgages. While Fannie Mae and Freddie Mac announced they would lower their down payment minimum on mortgages to three percent.
“While these changes certainly open up opportunities for first-time home buyers, the process is certainly not cut and dry,” said Trumble. “First-time homebuyers need to remember that this is a long-term investment and, therefore, understanding the process and your options can help lower interest rates, which will ultimately save you thousands over the life of a 30 year mortgage.”
The housing counseling experts at American Consumer Credit Counseling have provided the top five things every first time homebuyer should know before beginning their house search.
1. The process. It’s a long and complicated one. Be sure to keep in mind the importance of every necessary step to take along the way. Know that it will take time, so take it slow. Don’t get blindsided along the way, and do not get dejected. The process is a commitment. If you plan on purchasing a house, you have to be all in. In time it will happen. Just stay on course.
2. Be prepared. Take a homebuyers course. Information is your friend in this process. You can find all sorts of extremely valuable information from this course, many of which are available online. They help homebuyers by providing detailed information, advice, and budgeting tips for purchasing a new home, give them the tools needed to be smart about the process, and most importantly can potentially save the homebuyer money. For example, one recent survey from the Consumer Finance Protection Bureau found that 47 percent of homebuyers are not comparing lenders when they are seeking mortgage offers, which can significantly impact their ability to get competitive rates.
3. Credit reports and trade lines. Be sure to check your credit score before you do anything else. It is the first thing that the bank will do. It’s possible that your report contains mistakes or inaccuracies. These could severely affect your ability to buy a home. Your credit report is vital to being granted mortgages. If your score is too low, take a step back. Improve your score, and then reassess. It’s also necessary to keep up multiple trade lines. Lenders look for at least three or more trade lines. These can consist of credit cards, student loans, or car loans.
4. Your budget. Make sure you know exactly what you can afford. Check your credit history. If you aren’t on track with payments, you might not be able to take out a mortgage. Before you start the home buying process, make sure to get on track with your credit cards, utilities, and student loan payments, and then see what your budget is.
5. How to save. If you have savings, you can lower your debt prior to buying your new home. You can make a larger down payment, which leads to saving more in additional insurances and gives you more buying power. You do not want to make a risky investment without having money in your bank account. You do not want to increase any debts during the process or move finances around. Having money saved up will allow you to stay stable while banks and lenders and going through your approvals.
ACCC is a 501(c)3 organization, that provides free credit counseling, bankruptcy counseling, and housing counseling to consumers nationwide in need of financial literacy education and money management. For more information, contact ACCC:
- For credit counseling, call 800-769-3571
- For bankruptcy counseling, call 866-826-6924
- For housing counseling, call 866-826-7180
- For information on financial education workshops in New England, call 800-769-3571 x1980
- Or visit us online at ConsumerCredit.com
About American Consumer Credit Counseling
American Consumer Credit Counseling (ACCC) is a non-profit 501(c)(3) organization dedicated to empowering consumers to achieve financial health through education, counseling, and debt management. ACCC provides individuals with practical solutions for solving financial problems and recognizes that consumers’ financial difficulties are often not the result of poor spending habits, but more frequently from extenuating circumstances beyond their control. As one of the nation’s leading providers of financial education and credit counseling services, ACCC works with consumers to help them with the best plan of action to reduce their debt and regain financial stability. ACCC is accredited by the Better Business Bureau and holds an A+ rating. It is also a member of the Association of Independent Consumer Credit Counseling Agencies. For more information or to access free financial education resources log on to ConsumerCredit.com or visit TalkingCentsBlog.com.
