Expert Tips For First Time Home Buyers

Being a first-time homeowner can be one of the most important financial decisions you’ll make in your life. However, purchasing a home can be a bit challenging, particularly for first time home buyers – whether you’re in State College or anywhere else in Pennsylvania.  

Engaging in real estate affairs as a novice makes you potentially vulnerable to make some classic mistakes.  

To unravel these problematic experiences, you need to be furnished with professional advice from a reputable mortgage company to make informed decisions when buying a house. 

Are you considering becoming a first time home buyer? We sat down to discuss the first time home buyer experience with D. Shane Whitteker, owner and chief broker at State College mortgage company Principle Home Mortgage. The following tips will help you navigate the home buying experience. 
 

Compare mortgage rates and fees 

The consumer financial protection bureau recommends comparing the cost, origination fees, and interest rates from multiple lenders offering loans for the same mortgage type. Your local mortgage broker will be able to give you a look at multiple mortgage options.   
 

Evaluate mortgage options 

Different types of mortgages are offered anchored on eligibility and varying down payment requirements. The main categories include; 

Veterans Administration (VA) mortgages 
These are mortgage loans available to US military veterans and guaranteed by the Veterans Administration. This mortgage type offers very favorable terms for those who qualify.   

Conventional mortgages 
A conventional mortgage is the most common mortgage type. Interest rates and terms are dictated primarily by your financial situation.  

Federal housing administration (FHA) loans 
FHA loans are a great option for those with a less than perfect financial history who still wish to purchase a home.  

USDA loans for rural-based house buyers 
USDA mortgage loans are available to certain homes that meet the USDA qualification requirements.  
 

Establish how much house you can afford 

Whether you are a first time home buyer in State College - or anywhere else in Pennsylvania, make sure that you are procuring a home that you can afford. If you buy the right home that suits your budget, you will have financial peace when servicing your mortgage. Purchasing an expensive home that is not comfortable for your income level can result in stress and pain. So before you make a move to acquire a new home, let the house's affordability be a key factor based on your income and budget. 

Expert tip: “This comes down to qualifying and also to what you can comfortably afford,” Whitteker says. “I find that people can frequently qualify for a higher payment than they can actually comfortably make.”  

How can you know what a comfortable mortgage payment would be for your income level? Whitteker recommends you consider your “DTI ratio” as well as a call to your local mortgage broker.  

“Your debt to income ratio will dictate your maximum qualifying purchase price,” Whitteker says. “Your monthly budget and a conversation with your mortgage broker will help to discern how much you can pay per month without causing issues in your financial budget.” 

Hire a professional real estate agent 

When you want to buy a house, it's wise to engage a professional realtor because your home is one of your most expensive assets. Ensure that you get an experienced real estate agent who will guide you to acquire an affordable and accommodating house to your budget. Your agent will represent you fully and assist you in making informed decisions. 

Check your credit rating 

When you decide to take a mortgage, a credit score is one of the most critical factors to be considered. Your credit score dictates your interest rates and also may affect your loan terms. Establish what is affecting your credit ranking and look for opportunities that will improve it. 
 

Budget for all costs 

You need to save and budget for the money required to close your mortgage, which generally runs between3.5% and 8% of the purchase price  

Expert tip: Once you purchase your home, you’ll have a list of financial responsibilities.  

“Your homeowner costs typically include utilities, maintenance of the home, real estate taxes, mortgage payment, homeowner insurance premium, possible repair costs relating to damage to the home, etc.” Whitteker says.  

Home owner insurance needs can vary depending upon location.  

“The two type of insurance you may need are flood and homeowners,” Whitteker says. “Homeowners is always required when getting a mortgage. Flood insurance depends on the location of the property.” 


Pick the right neighborhood 

Try to locate a house in the right neighborhood by choosing an area with the right social amenities like schools, pharmacies, hospitals, and shops. Assess the environment's serenity to rule out traffic, noise, and activity levels. 
 

Get educated 

Acquiring knowledge about the local housing market, including taxes and prices for recently sold homes gives you an upper hand when purchasing a home for the first time. Buying a house today can be challenging, but having a mortgage broker to help guide you through the process can be invaluable. 

Expert Tip: Once you’re in the process, it doesn’t mean you’re entirely locked into anything yet.  

“You will set up a contract which will lay out certain protections. An example is your mortgage contingency. If you are denied financing you are allowed to exit the contract,” Whitteker says. “You might lose your earnest money deposit depending on certain factors but this is an out for you. Property inspection is an out as well as long as it is done within the timeframe the contract identifies.” 
 

Don't rush it 

Buying a home can be the most significant financial transaction you’ll ever make - so it pays to be prepared with information and an expert to help guide you through the entire process. The right mortgage broker can make a huge difference in your home buying experience. 

Are you preparing to own a house for the first time? Contact the State College mortgage experts at Principle Home Mortgage. They specialize in helping first time home buyers through each step of the buying process.  Give them a call at (814) 308-0959 to learn more.