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What you can do now to become a first time home owner in 2011

What you can do now to become a first time home owner in 2011
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First time home buyer in 2011

If you’re a first time home buyer who has decided that 2011 is the year you will make the jump from first time home buyer to first time home owner, then now is the time to get prepared.
Buying your first home is a process, not an event, so you have to have an action plan that will get you through this process with your sanity intact.
Here are 5 things you can do now to help you get ready for owning your first home in 2011:

1) Test drive the lifestyle – Owning costs more than renting and most first time home buyers find they will have to make some lifestyle sacrifices. It might be as simple as cutting out that daily mocha grande frappiccino or  packing a lunch three or four days a week,
Whatever those sacrifices may be, you might want to find out if you can adjust BEFORE you buy instead of after.
Test drive before you buys

2) Keep your financial house in order – Lenders are examining every loan application more closely than ever before. Interest rates have increased over the last couple months and many lenders now have a minimum credit score of 640. Very shortly many of those lenders will also have a maximum debt-to-income ratio of 45%. So whether or not you’ve been pre-approved in the past, you might want to get with your lender to make sure your still in the market.
As lender’s we’re going to look at all aspects of your financial picture to determine your ability to repay us and repay us on time, so make sure your financial house can stand up to lender scrutiny.
Why first time home buyers need to pay attention to their credit
First time home buyers better have clean underwear

3) Check out all the first time home buyer incentives - There are a lot of good reasons to own your first home. First of all it belongs to you and your family, your not making someone else’s mortgage payment, your getting tax write-offs for mortgage interest and property taxes AND state and local governments are throwing money your way in the form of down payment assistance and tax credits.
Below market interest rates for California First Time HomeBuyers
Down payment assistance programs for first time home buyers
Tax credits for first time home buyers

4) Find a Realtor and Lender team who are specialists in first time home buyer programs
The loan programs and special incentives that are available for first time home buyers require an expertise that not all Realtors and Lenders have. You need a team that represents YOU!, not the seller, bank or builder.  First time home buyer loan programs are more paperwork intensive, require more time, and have more exacting guidelines, so your representative has to be looking out for best interest to get you to a successful closing.
Why first time home buyers need their own Realtor

5) Quit procrastinating! – If you’ve made the decision to move from first time home buyer to first time home owner, then get up off the couch, use the DVR to record your favorite programs and get started. Sure home prices will continue to drop, but we’ve already seen interest rates climb and over the long term interest rates will have a greater impact on your cost of homeownership.
What is the real cost of waiting for first time home buyers?

Other related posts:
Why good credit is important for first time home buyers
First time home buyer loans with no credit scores
First Time Home Buyers 10 good reasons to buy now
First Time Home Buyers – How to buy your first home
First Time Home Buyers – should you buy a new home
First Time Home Buyers – is it the right time to buy

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Mzbrown1982 says:

Isthe reason your score has to be so high because of the amount of the loan. I am currently in the low 600s and i have found a house i want that only costs $54,000. It’s a foreclosure. Am i able to get approved anywhere if i don’t have a 620 or 640. My rent is $775, great history and a mortgage with a home that price will be less than $500 i’m sure. I don’t want to lose the opportunity to purchase this home…Any advice?

Greg says:

The size of your loan doesn’t affect the required minimum credit score. Not sure where you’re looking to buy your first home, but you should contact a lender in your area who specializes in first time home buyers and work together to raise your score. It shouldn’t take too much work to get it up to 620 or 640.

Andrea says:

I am wondering if the debt to income ratio includes student loan debts? Above you stated: “Very shortly many of those lenders will also have a maximum debt-to-income ratio of 45%.” If that includes student loans a lot of people will have a harder time getting a mortgage.
We are searching for our first home and have excellent credit, but my husband hasn’t worked at his position for 2 years. Do lenders still have strict rules on how long you have worked in your current position? I assume so because I know it is getting harder than ever to get a loan. We also don’t have much in the way of down payment and are looking for down payment assistance programs. Do you think they are worth it? Does it really pan out to be better than the hazard insurance?
Sorry to hit you with so many questions…thanks!

Greg says:

Andrea, thanks for dropping by
You asked a lot of great questions. Yes, student loans are counted in your debt to income ratio unless they are deferred.
Whether your husband needs two full years on the job depends on a number of factors like education, type of employment etc.
I definitely think down payment assistance programs are a great choice for many families.
For most it’s all that stands between them and homeownership.
If you have any more questions, don’t hesitate to contact us again.

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