6 Tips for First-Time Homebuyers
In honor of National Home Ownership Month, we’ve gathered our best advice for first-time homebuyers.
Buying a home is probably the biggest purchase you will ever make, and for a first-time homebuyer the process can be overwhelming and stressful.
In honor of National Home Ownership Month, three Zions Bank mortgage officers share valuable information and insight based on years of helping first-time buyers achieve their goals.
Following are our top tips to help you navigate the home buying process with confidence and greater ease.
First-Time Homebuyer Tip #1: Don’t disqualify yourself
Many prospective buyers make the mistake of assuming they won’t qualify for financing so they don’t bother trying. Before you count yourself out, talk to your banker.
“It’s best to set up an appointment to meet with a mortgage professional and ask them if you qualify for financing,” says Anthony J. Graham, Zions Private Mortgage Banker in St. George, Utah. “They will typically review your credit, discuss your income sources and history, talk about sources of funds for a down payment, and your monthly mortgage payment budget.”
Graham explains that many times he’s met with clients who were convinced they wouldn’t qualify for financing and walked out of his office with conditional approval letters in hand.
First-Time Homebuyer Tip #2: Don’t give up
If you’ve met with your mortgage banker and you don’t qualify for financing right now, don’t give up.
“Don’t get frustrated and quit the process,” Graham advises. “Simply ask what you need to do to help you qualify in the future.” In many cases, it’s a matter of paying down debt, spending a few more months in a new job, or saving a bit more for your down payment.
The key is to find out what steps you need to take to qualify in the near future. “Time passes quickly, stay on course, and soon you will be moving into your new home,” Graham says.
First-Time Homebuyer Tip #3: Get your paperwork in order
A key aspect of the home loan process is a review of your finances. When you apply for a mortgage, you will need to provide income, asset, and credit documentation.
Begin the process of organizing your financial information now by gathering your most recent tax returns, pay stubs and bank statements. Type up your address and job history with dates.
“Having all of this prepared in a folder and ready to review with your mortgage banker will make things go so much more smoothly,” Graham explains.
First-Time Homebuyer Tip #4: Prepare financially
“Prior to applying for a home loan, make sure you’ve done all you can to be in the best financial shape possible,” says Joshua Reese, Zions Bank mortgage officer in Boise.
He recommends taking steps to pay down credit card balances, address any collections and make sure you are paying bills on time. In addition, 30 days prior to applying for a mortgage and during your loan approval process, avoid applying for credit or taking on any new liabilities, such as an auto loan.
He adds that first-time homebuyer programs offered by government agencies may not require perfect credit, but a better credit score can help lower your monthly mortgage insurance payment and increase your eligibility for down payment or closing cost assistance.
First-Time Homebuyer Tip #5: Educate yourself
A home purchase is big deal, and the mortgage is just the beginning. From HOA (Home Owners Association) dues to CC&R’s (Covenants, Conditions & Restrictions) — there's a lot to learn when buying your first home.
“It can be overwhelming if you’re not aware of the commitment you are making,” Reese says. He notes that many agencies offer first-time homebuyer classes and resources aimed at educating new buyers about homeownership, including the Idaho Housing and Finance Association and the Community Development Corporation of Utah.
First-Time Homebuyer Tip #6: Know Your Options
As a first-time homebuyer, it’s important to understand your loan and down payment options. If you don’t have the 20 percent typically required for a conventional mortgage, talk to your mortgage banker about alternatives that may be available.
“There are several home loan programs that reduce or eliminate your down payment, or offer down payment assistance,” says Ross Farr, Zions Bank mortgage officer in Pocatello, Idaho. It’s also possible for first-time homebuyers to get help with their home loan from a family member who is willing to cosign or provide gifted funds for a down payment.
Farr notes that each of these programs has requirements to qualify, but that many first-time homebuyers aren’t aware of the resources available to assist them on their path to homeownership.
Want to learn more? Visit the Zions Bank Home Loan Learning Center to compare home loans, answer your mortgage questions and discover additional mortgage resources, including a directory of Zions Bank mortgage lenders across Utah and Idaho as well as more information about the home-buying process.
Ali Hardy is a freelance writer for Zions Bank.