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FIRST-TIME HOME BUYER'S GUIDE

Everything you need to know to purchase your first home

Understand the unique advantages and challenges of being a first-time home buyer.
Learn how to qualify for a home loan as a first-time home buyer.
Understand all the key aspects of buying a home for the first time.

First-time home buyer

Buying a home can be challenging for a first-time home buyer. There are many steps, details, and requirements. You worry about making an expensive commitment that may turn into a mistake.

But there is a good side of the story for first-time home buyers. You enjoy some special treats created to encourage new entrants into the real estate world.

On this page, you will find a solid list of what you need to consider before buying a home. This also includes all the necessary steps and details of the buying process.

First-time home buyer ADVANTAGES

Owning a house is a dream that almost every one of us has. For first time home buyers, this might come as a challenge. However, there's nothing to worry about.

As a first-time home buyer, you'll get access to state programs, tax breaks, and federally-backed mortgage loans if you don't have enough funds for a down payment. It may be possible to enjoy the benefits of being classified as a "first-time home buyer" even if it is not your first time buying a home.

WHO QUALIFIES FOR FIRST-TIME HOME BUYER BENEFITS?

A first-time home buyer, according to the U.S. Department of Housing and Urban Development (HUD), is someone who meets any of the following conditions:

Past ownership 

Any person who has not owned a principal residence for the past three years. If you have owned a home in the past, but your spouse has not, as a couple, you are eligible as first-time home buyers.

single parent

A single parent who has only owned a home while married with their former spouse.

Displaced homemakers

Displaced homemakers who owned a property in the past through their spouse.

residence not affixed

Individuals who have only owned a main residence that is not permanently affixed to a permanent foundation following applicable regulations.

incompliant property

Individuals who owned a property that was not in compliance with state, local, or model building codes, if that property cannot be brought into compliance for less than the cost of constructing a permanent structure.
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Questions to consider before you buy a home

Your first step is to determine what your long-term goals are and how homeownership fits in with those goals.
Perhaps you're simply looking to transform all those "wasted" rent payments into mortgage payments that give you something tangible like equity.
Maybe you want to experience homeownership to become independent and enjoy being your own landlord.
Or you just want to buy a home as an investment for the future.
Whatever the case, finding out what you want as a homeowner and having your goals clear will point you in the right direction.

The following questions are for first-time home buyers like you. Answering them will help you understand where you are currently and will guide you throughout the process.

How is your financial health?

Before thinking about going online in search of homes, do a serious audit of your finances. You need to be prepared for both the purchase and the ongoing expenses of a home. The results of this audit will tell you if you are ready to make a big commitment, or if you need more time to prepare. Follow these steps in checking your financial health:

Look at your savings

Make sure you have enough savings for three to six months worth of living expenses. You should not consider buying a home before acquiring that amount. Why? Because when you buy a home, there will be considerable upfront expenses which include the down payment and closing costs. You need money put away not only for those costs but also for an emergency fund that lenders will require.

One of the biggest challenges in saving is to put it in an income-generating medium to help you keep up with the inflation. If you want to meet your goal in 1 to 3 years, a certificate of deposit may be good for you. It is not going to make you a lot of money, but you are not going to lose any. Still, you need to keep an eye for early cashing out penalties.

Another choice would be a high-yield savings account. This is if you want to reach your goal sooner, perhaps in 6 to 12 months. For that, keeping the money liquid is the best option. Make sure it is FDIC-insured (most banks are) so that if the bank goes under, you will still have access to your money up to $250,000.

Review your spending

You need to know exactly how much you're earning every month—and where it's going. This calculation will tell you how much you can allocate to a mortgage payment. Make sure you account for everything: utilities, food, car maintenance and payments, student debt, clothing, kids' activities, entertainment, retirement savings, regular savings, and any other miscellaneous items.

Check your credit

Generally, to qualify for a home loan, you'll need good credit, a history of paying your bills on time, and a maximum debt-to-income (DTI) ratio of 43%. Lenders these days prefer to limit housing expenses like principal, interest, taxes, and homeowner's insurance, to about 30% of the borrower's monthly gross income. However, this amount can differ depending on the local real estate market.

ARE YOU LOOKING FORWARD TO BUYING A HOME?

Is it getting hard to keep up with so many financial details?

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Which type of home is best for you?

There are a lot of options you can choose from when purchasing a residential property:
A traditional single-family home
A duplex
A townhouse
A condo
A co-operative
A multi-family building with two to four units.
Each type of construction has its pros and cons. Your choice will depend on your previously-defined goals as a homeowner. So if you're having a hard time deciding on which type of home you want, create a list of goals first.

Although you can save on the purchase price by choosing a fixer-upper, you have to consider the amount of time, sweat, equity, and money required to turn it into your dream home. Otherwise, it might be a lot more than you bargained for.

What features do you want for your home?

It is good to be flexible in what you want, but always remember you are making one of the biggest and most important purchases of your life. So make sure you list everything you need and want in your home. Your list must include basic needs and desires, from property size and neighborhood down to smaller features like bathroom design and layout, kitchen structure, and the types of appliances you require.

How much mortgage do you qualify for?

Before you start shopping, it's important to get an idea of how much a lender will give you to purchase your first home. You may think you can afford a $300,000 home, but lenders may think you're only good for $200,000 based on factors like how much other debt you have, how much money you earn each month, and for how long you have been working your current job. Make a note that many realtors will not spend time with clients who cannot tell how much they can afford to spend.

Make sure to get preapproved for a mortgage loan before placing an offer on a home. In many instances, sellers will not even entertain an offer that is not accompanied by a mortgage pre-approval. So, apply for a mortgage and complete the necessary paperwork. It is best to shop around for a lender and to compare interest rates and fees using a tool like a mortgage calculator.

HOW MUCH HOME CAN YOU AFFORD?

Sometimes banks will offer you bigger mortgage loans than you want to pay for. But just because a bank makes that huge offer doesn't mean you should borrow that much. Many first-time homebuyers make this mistake and end up "house-poor" with little left after they make their monthly mortgage payment to cover other costs, such as clothing, utilities, vacations, entertainment, or even food.

To decide how big your mortgage loan should be, you'll have to take note of the total cost of the house you like, not just the monthly payment. Consider every detail you need in the house such as: how high the property taxes are, the homeowner insurance cost, the maintenance and repair expenses, and the closing costs.

WHO CAN HELP YOU FIND THE RIGHT HOME At THE RIGHT PRICE?

You can rely on a real estate agent to help you find homes that meet your needs and are within your price range. They can also take you along to view those homes. Once you've chosen a home to buy, your real estate agent can assist you in negotiating the purchase and completing paperwork. Most agents receive a commission paid from the seller's proceeds.

DO I QUALIFY FOR DOWNPAYMENT ASSISTANCE IN MY FLORIDA COUNTY?

Each county has its own set of rules and conditions in determining if a home buyer needs down payment assistance. If you are a first-time home buyer applying for Down Payment Assistance in Florida, here is a sample list of some requirements you might encounter.

NOTE: This list is a sample representation of the Down Payment Assistance requirements and does not directly apply to a specific county.

If you want to know the exact requirements needed for Down Payment Assistance in your Florida county, please get in touch with us.
You must complete approved Homebuyers Education Seminars
It is required you have a minimum credit score of 640 points
You must have had a residency in the specific metro area in the last 12 months
Only legal residents of the United States are allowed to qualify
You must provide $1,000 or 1.75% of the purchase price, whichever is higher
Your income cannot exceed the county program limits
To be a first-time home buyer you cannot have owned a home for the last 3 years
The maximum sale price, regardless of the property type, cannot exceed $214,000
Single-family homes are eligible
Condominiums are eligible
Assistance cannot exceed $30,000

ARE YOU A FIRST-TIME HOME BUYER LOOKING FOR A HOME LOAN?

Are you getting frustrated because you don't know where to start?

LET OUR MORTGAGE BROKERS DO THE HARD WORK FOR YOU

AND TURN YOUR DREAM HOME INTO A REALITY

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