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					Financial Tips for the First Time Home Buyer

Understanding all of the ins and outs of buying a home can be difficult enough for those who have been
through the process and it is doubly so for those who are buying there very first home. Following is a list
of basic financial tips for first time buyers that can help to prepare you for your first home purchase.

       It’s good for all of us – First time home buyers are a very good thing for the American economy.
        As a first time buyer you are in a unique and opportunistic position and people will want to work
        with you. Look for deals everywhere whether you are thinking about a new home or a
        previously owned home.

       Get your credit in order – It takes time to build a solid credit report so begin now to prepare for
        your future. Get to know everything about your credit report and credit score by ordering
        reports on all of your credit. Unfortunately Experian no longer allows consumers access to their
        credit score, Trans Union and Equifax still offer this as a service. Sign up for a service such as and look through your credit report for any inconsistencies or incorrect
        marks. These are often items that can be disputed and removed. A better credit score can
        translate into a lower interest rate and lower monthly payments on your mortgage.

       Save for your down payment – At the time of this writing (2009) nearly every lending institution
        is requiring a 20% down payment. Some FHA and VA loans are as low as 0-3% but this also
        means that your monthly rate can be significantly higher. In a seller’s market, down payments
        can be as low as 5-10%.

       Save for your closing costs – your closing costs are going to be approximately 1-3% (give or take
        a couple of points either way) so be prepared to pay this out of pocket to avoid adding it to your
        mortgage. The moment you add this to your mortgage you wind up paying for it for the
        duration of your loan. You can get a good faith estimate from your home lender, but it is a good
        idea to prepare for around 2% at least.

       Figure out how much of a home you can realistically afford – Are you prepared to pay 25 to 30%
        of your monthly income on your home? Spending time with your lender will help you to run
        through the calculations and make an educated estimate on the amount that you can afford to
        spend on your new home. Don’t forget to take into account homeowner’s insurance and the
        other costs of month to month living in your home such as the increased cost of heating,
        garbage disposal, etc.
   Look for first time home buyer plans – Everyone from the government to private lending
    institutions have first time buyers programs. Start at, but just like any other lender you
    will want to research multiple programs and find the one that works best for you and your
    particular situation.
    Start collecting boxes – This seemingly small and often overlooked thought can actually be quite
    frustrating for first time home buyers as they often overlook this detail. You see boxes
    everywhere except for the week that you decide to move – at which time they are suddenly all
    gone. Boxes and supplies for moving can cost you several hundred dollars. Check with stores
    and friends that have just moved for extra boxes up to a month prior to moving and check on

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