A first-time home buyer checklist is a must if you want to be fully prepared for the exciting and also daunting journey of purchasing your new house. While it’s much more fun to think about paint colors and what it will feel like to walk into your new home for the first time, there are a few critical steps to take first. Good planning and patience as you go into the home buying process will pay off in the long run!
Save for a down payment, but only if you are using a conventional home loan.
If you are using a VA loan, it’s likely that you won’t need a down payment. VA home loans have really incredible benefits. One perk is that down payments are not required. You may choose to provide a down payment which will decrease your monthly mortgage payments. (Adding this in doesn’t make sense. However, you have the option of skipping the down payment step if you are buying a home that doesn’t exceed the specific county VA loan limits, as they can be different in each county
VA jumbo loans make living in a high-cost county or purchasing a higher-priced home more achievable. The incredible benefit for Veterans using a VA jumbo loan is a greatly reduced down payment. Down payments can feel intimidating. But for VA jumbo loans, the amounts are not as much as you might initially think. In fact, VA jumbo loans have lower interest rates and significantly lower down payments compared to conventional home loans.
Be sure to try out our VA loan limits calculator and find out what you can expect in terms of loan limits for the county you want to move to!
Create a budget and stick to it.
Creating a money management plan is essential. You will be rewarded by avoiding large and expensive purchases like financing an automobile for a time, remembering that delayed gratification will help you achieve the dream of homeownership. Deferring this kind of purchase will improve your debt-to-income ratio, which will help you qualify for the loan. Learning to budget is an essential skill to practice before you become a homeowner. Your new home will require money management skills for ongoing maintenance and home improvements. Be disciplined about spending and regularly review your accounts and expenses.
On top of savings that will go toward the purchase of a new home, financial planners suggest that it is a good idea to keep three months of Income on hand, just in case of an emergency.
Check your credit report and improve your score as much as possible.
Your income and credit score are both crucial to getting pre-approved for a mortgage loan at excellent rates. The sooner you obtain a copy of your credit report, the sooner you will be able to rectify any problems before taking other concrete steps like applying for pre-approval. Improving your debt-to-income ratio is a matter of taking specific actions, like strict budgeting to pay off balances on existing credit accounts. It is essential to avoid opening new credit cards or getting new loans.
Determine what you can afford.
Your household income, available savings, and monthly debts will largely determine how much you can afford when purchasing a new home. You will also need to think carefully about where to purchase a home. Consider how location affects the price of the home and ongoing expenses (e.g., property taxes, HOA fees, etc.). A good rule of thumb is to not spend more than thirty percent of your monthly household income on housing, although at today’s home prices, this benchmark is a bit idealistic
Our VA mortgage loan payment calculator is a handy tool to estimate your monthly mortgage payments!
Once you have determined what you can realistically afford as a monthly mortgage payment, you can figure out how much house to buy. It will help to find out what interest rates you qualify for.
Get pre-approved for a mortgage loan.
Getting pre-approved for a mortgage loan is exactly the step you will want to take next. Pre-approval is when a lender establishes that you are qualified to borrow up to a certain amount on a mortgage loan and at a specific interest rate. Mortgage pre-approval is essential as you prepare to buy your first home because it shows that you are creditworthy. To determine pre-approval, a lender will verify and examine your credit and income.
The lender will need your social security number to run a credit check. To document income, be prepared to give the lender a full month of pay stubs and bank account statements, W-2s, and tax returns. If you have investments, the lender will need those account statements to document the amounts.
The lender will provide you with a pre-approval letter after checking your financial situation. If you submit this letter when making offers on a home, the seller will know that you will, in fact, be able to obtain a mortgage loan. Generally, pre-approval is valid for 60-90 days, depending on the lender. Be sure to confirm the time period with your lender.
Remember, pre-approval does not mean that your home loan is guaranteed. The lender will still need to appraise the value of the home you are attempting to buy.
Compare and choose a mortgage lender.
When comparing mortgage lenders, consider interest rates, lending fees, and reviews for customer satisfaction. If you are a Veteran or active service member, then SoCal VA Homes encourages you to talk to us about using VA home loan benefits. There are so many reasons for a borrower to use VA home loan benefits instead of a conventional loan besides the optional down payment and lower interest rates mentioned above.
If you are a Veteran, a qualified active service member, or the spouse of a service member who died in the line of duty or as a result of a service-related disability, then your VA home loan benefits never expire, and you can use them more than once. A history of bankruptcy or foreclosure and low credit scores are not outright roadblocks to obtaining a VA home loan. In fact, VA guidelines do not stipulate a minimum credit score. Lenders are interested in more very recent financial history when it comes to VA home loans.
SoCal VA Homes is Here to Help Veterans
SoCal VA Homes is different from other VA home loan lenders, and this matters to you, the buyer. You worked hard to serve your country. We recognize this sacrifice. Your family may have made sacrifices to allow for your service. These sacrifices are recognized through VA benefits like home loans. Many aspects of our company set SoCal VA Homes apart from other lenders. Not only do we understand the unique challenges Veterans face when using their VA home loan benefits, our team of Veteran real estate and lending pros utilize our unique and powerful programs (LINK) to achieve your homeownership goals. We are passionate about making sure none of those challenges get in the way of the dream of homeownership, not after you sacrificed so much.
If you have found this first time home buyer checklist helpful and feel ready to take the next step, give us a call! At SoCal VA Homes, we are experts at navigating the tricks and turns of buying a home. We are especially eager to help Veterans achieve the dream of owning their first home.
Read more about the ins and outs of buying your first home and using VA home loan benefits on our blog. Call (949) 268-7742 today. We would love to sit down and talk about how to prepare you to buy your very first home!
