{"id":4586,"date":"2023-06-05T15:49:45","date_gmt":"2023-06-05T22:49:45","guid":{"rendered":"https:\/\/www.soundcu.com\/?p=4586"},"modified":"2025-10-21T16:55:57","modified_gmt":"2025-10-21T23:55:57","slug":"what-to-consider-financially-as-a-first-time-homebuyer","status":"publish","type":"post","link":"https:\/\/www.soundcu.com\/blog\/what-to-consider-financially-as-a-first-time-homebuyer\/","title":{"rendered":"What to Consider Financially As A First-Time Homebuyer"},"content":{"rendered":"
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So, you\u2019re ready to buy your first home. Congratulations! For many people, taking this step is one of the biggest financial moves they will make in their entire lives. Because of that and because it\u2019s a lot more complicated than something else you\u2019d need to finance (like a car), you\u2019re going to want to tread carefully.<\/p>\n

Some recent surveys have shown that many homebuyers express regret. Research from Zillow, for example, showed that 75% of homebuyers wish they had done at least one thing differently<\/a>.\u00a0 About one-third regret buying a home that needs more work or maintenance than they originally expected. And one-quarter wish they would have purchased in a different area.<\/p>\n

But don\u2019t panic. Getting through the process unscathed is possible as long as you take your time and check off all the boxes. Here are the most important things for first-time buyers to keep in mind when embarking on their search. And even if you don\u2019t plan to make a purchase until later in the year, educating yourself now gives you more time to set yourself up for success<\/a>.<\/p>\n

How Much Home Can You Afford?<\/strong><\/h2>\n

It\u2019s vital to know what you can afford to spend, and how much a certain price range will cost you every month in terms of a mortgage payment. Mortgage lenders like to see that you\u2019re spending no more than 36% of your gross income on your home loan<\/a> and other debts combined. Sometimes they let you stretch this ratio, but you shouldn\u2019t really try to for your own financial wellbeing. You\u2019ll also need to factor in appraisal fees, inspection fees and closing costs \u2014 which typically run 3% to 6% of your purchase price \u2014 and of course, your down payment.\u00a0 Although it\u2019s possible to put down as little as 3% and qualify for a conventional mortgage, think about trying to put down 10% if possible. And, if you can cross the 20% down threshold, you can avoid having to pay pricey private mortgage insurance, known as PMI. Our home loan calculator<\/a> can help you with understanding the costs of a home.<\/p>\n

Don\u2019t Forget The Other <\/em>Costs of Homeownership<\/strong><\/h2>\n

Some financial experts suggest doing what\u2019s called \u201cplaying house,\u201d which means figuring out what you\u2019ll likely owe each month and then taking that amount out of your budget each month, like a mock mortgage payment. Then, see how that feels. Will you be able to manage your other expenses and daily spending? Are you going to be comfortable spending that amount for the next 20 or 30 years? Completing this exercise will hopefully give you a baseline for a mortgage amount you can comfortably afford. And remember, the costs don\u2019t end with your monthly mortgage. You\u2019ll also need to plan ahead for property taxes, insurance, utilities, garbage and trash fees, HOA fees, and maintenance charges. If you\u2019ve got a friend in the area, ask what they spend outside their mortgage to get an idea of what these costs tend to be.<\/p>\n

Focus On Your Credit Score<\/strong><\/h2>\n

Mortgage rates have jumped in recent times thanks to the spate of short-term interest rate hikes from the Federal Reserve. But a good deal of what you pay is in your control. The average mortgage rate for a person with an excellent credit score (from 760 to 850) was a full half point lower than it was for someone with a fair score (from 680 to 699). If you don\u2019t have a credit score of over 660, FICO says you won\u2019t see average interest rates, but will instead pay rates that are much higher.<\/p>\n

So what should you do? In the months before you plan to apply for a loan, see where your credit score is<\/a> and work to improve it if you need to. That means paying your bills on time, every time, and paying down balances on your credit cards as much as possible. Also, in the interim, don\u2019t apply for credit you don\u2019t need, but also hold off closing cards you\u2019re not using.<\/p>\n

And if you\u2019re looking for some help making sure your finances and credit are in tip top shape, check out the Finance Fixx<\/a> small group coaching program or GreenPath<\/a> to access one-on-one financial counseling.<\/p>\n

Get Pre-approved \u2013 Not Just Pre-Qualified<\/strong><\/h2>\n

First time homebuyers who get pre-approved for their mortgage can make a competitive offer quickly when they find their dream home. If you\u2019re pre-approved for full financing,<\/a> you can make a confident offer and stand out from other buyers who won\u2019t be able to close as quickly. In your journey to pre-approval, you should also go mortgage shopping. As mentioned above, comparing offers and shopping around for the best deal \u2013 particularly with credit unions \u2013 can save you money in the long run as lenders\u2019 rates<\/a> can vary substantially.<\/p>\n

But note: You\u2019ll also want to make sure you\u2019ll have some cushion in your bank account after you make your down payment. In other words, don\u2019t clean out your emergency fund and your vacation fund in order to make your new home happen. Lenders want to see that you will be able to make your mortgage payment even if you lose your main source of income.<\/p>\n

Ready, Set, (Window) Shop<\/strong><\/h2>\n

You may not be ready to buy your first home just yet, but it\u2019s a good idea to start looking around to see what your budget gets you in the areas you\u2019re most interested in. This can help you narrow in on neighborhoods you love. During this time you should also emotionally prepare yourself for the fact that there are \u201ca lot of fish in the sea.\u201d Four out of 10 buyers don\u2019t get the first house they make an offer on, notes Amanda Pendleton, a Zillow home trends expert, who cautions buyers to brace themselves for a few disappointments along the way.<\/p>\n

Decide on your future home\u2019s \u201cmust-haves\u201d and \u201cnice-to-haves.\u201d What can you live without? Pendleton says roughly half of all buyers have to make compromises to buy a house, so decide now what those are. Are you willing to have a longer commute, or will you take a smaller kitchen if there\u2019s a gorgeous master bath? Deciding where you\u2019re willing to compromise ahead of time can help with the stress of having to make a quick decision.<\/p>\n

Don\u2019t Give Up The Home Inspection<\/strong><\/h2>\n

Finally, if you\u2019re tempted to forgo a home inspection \u2013 say you happen to get into the thick of a bidding war \u2013 here\u2019s a word of caution: Don\u2019t<\/em>. It\u2019s imperative to have a licensed and bonded professional give it a thorough once-over. Even the most beautiful house isn\u2019t worth taking risks on. And even new homes could have expensive-to-repair foundation issues \u2013 something that wouldn\u2019t be obvious to a first-time buyer in love with the property.<\/p>\n

If you’re ready to start your journey, one of our Mortgage Loan Officers<\/a> can help! Happy hunting!<\/p>\n

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Here are the most important things for first-time buyers to keep in mind when embarking on their search. Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":13,"featured_media":4587,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","_searchwp_excluded":"","footnotes":""},"categories":[50],"tags":[],"class_list":["post-4586","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-life-finances"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/4586","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/comments?post=4586"}],"version-history":[{"count":6,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/4586\/revisions"}],"predecessor-version":[{"id":17299,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/4586\/revisions\/17299"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/media\/4587"}],"wp:attachment":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/media?parent=4586"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/categories?post=4586"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/tags?post=4586"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}