3 Rules to Follow for First-Time Home Buyers
Purchasing your first home is a big step. However, there are a few things that can trip you up if you’re not on your toes. Make sure your next chapter is a good one with these tips.
1. Don’t Make Large Purchases
Picture this: you have prequalified for a loan. You’re ready to move into the house of your dreams, the contract is signed and closing is just a month away. To celebrate, you finance another big purchase, like a new car, appliances or furniture for the entire house, only to learn the hard way: Making a big purchase even after you’ve received your pre-approval letter can jeopardize your home loan approval and in some cases kill the deal completely. When you apply for a mortgage loan a lender takes a look at your monthly payments and your income. It’s called a debt-to-income ratio. In most cases, lenders want to see that the total of your monthly payments does not go over 43 percent of what you make before taxes. They also do a stress test. In most cases, lenders want to see that the total of your monthly payments does not go over 43 percent of what you make before taxes. Financing an exorbitant purchase can tip your debt-to-income ratio, which not only results in delays but in some cases a turned-down loan. So, if you’ve got your eye on a new baby-friendly car or a trio of state-of-the-art kitchen appliances, it’s best to wait until all of the paperwork has cleared. Everyone’s debt-to-income ratio is different. If you are not sure how a big purchase might affect your own loan approval, talk to your loan officer.
2. Beware of Identity Thieves
Big life events, including purchasing your first home, can make you susceptible to identity theft. When you purchase a home, information about the transaction is posted as part of the public record, which typically includes the date you bought your home, the mortgage company and the sale price. Identity thieves can use this information to steal your identity. Some criminals will even go as far as calling you posing as a person from your mortgage company as a means to collect sensitive information. Whether you’re single, engaged or married, it’s best to seek help with monitoring, protecting and ensuring your identity via an identity theft protection service.
3. Always Complete a Thorough Home Inspection
At the time your offer is accepted, you will pay for a home inspector to come and take a look at the property. But not all home inspectors test the same things. When conducting your home’s first inspection be sure to choose a trusted home inspector that will test for mold, radon, and pests. Make sure that the inspector tests the inside and the outside of the home and has access to every area of the home, from crawl spaces to the roof. You will want to be present at the inspection so that in the event that any questions arise or if your inspector needs access to an area, you can be there to help. Plus, if you want the inspector to take a closer look at something you can be there to ask. Be sure to carefully review the entire inspection report. A home inspection report will identify major repairs and builder oversight as well as the maintenance that will be needed to keep the home in good shape if you decide to buy the home. In some cases, the seller may agree to make repairs if there are any.
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