Ten Tips for First-time Homebuyers:

1. Meet with a lender to get prequalified. This will give you an idea of the purchase price that you qualify for and the costs that are involved with getting a home loan. Nothing is worse than looking at a home that you love and finding out that you do not qualify. This will entail providing income and asset documentation as well as a credit check.

2. Determine the monthly payment that you would be comfortable paying. The amount that you qualify for is not necessarily the amount that that you would be comfortable paying. Your loan officer can let you know the purchase price that corresponds with your comfort zone payment.

3. Closing costs and down payment:

a. You have the right to ask the seller to pay some or all of your closing costs. This can be something that you request when you put an offer on the home that you would like to purchase.

b. You may also qualify for a Utah Housing program through your lender. This is a program that is set up to help first-time homebuyers who need help with their down payment or closing costs (or both). This program allows you to get a first mortgage for up to 96.5% of the purchase price. The remaining 3.5% down payment AND potentially some or all of your closing costs can be added to a small second mortgage. Keep in mind that the second mortgage is a 30 year fixed rate mortgage at 2% higher than the first mortgage rate. This is a wonderful program for first-time homebuyers.

c. If you have family that is willing to gift you funds towards your down payment and closing costs, that is allowed. But if you are going with a conventional loan then you MUST contribute your own funds in the amount of a 5% down payment. However, the closing costs and any additional funds can be gifted. If you only have a gift that will cover your down payment and closing costs, you will be required to do a FHA loan.

4. Work with your real estate agent (if applicable) to help you find a home in your price range. They are trained to help protect you through the purchase process and will be able to do all of the negotiations in your behalf.

5. Look in an area that you would like to live. Nothing is worse than buying a home you love just to find out that the neighborhood and/or school district is not up to your standards….location, location, location.

6. Keep in mind that foreclosure homes and short-sale offers always take more time. On a rare occasion will you get an accepted offer back quickly, but if this is the type of property you are seeking, make sure you have a lot of patience. Once the offer is accepted, the closing can happen as quickly as four weeks.

7. If you are looking at a condo, townhome or a single family residence located in an HOA, there will be additional monthly costs as well as some additional upfront costs at closing.

8. Make sure that you get a home inspection before you close on your new home loan. This is something that either you or the seller can pay for. It will determine if there are any problems with the home that you would like the seller to resolve prior to closing.

9. Once you find a home to purchase it may take up to 4 weeks to close on your new home. This is simply because disclosures need to be signed with the lender, an appraisal needs to be completed by the lender's appraiser and the lender's underwriter will have to review the loan for final approval.

10. Finally, you will want to purchase a home warranty at closing to cover any issues that may arise within the first year that you own the home. Understand that being a homeowner always includes extra costs. You will now need to take care of a yard, buy a washer and dryer, take care of all of the maintenance and pay monthly utilities. Also, if you do not pay your mortgage payments in a timely manner, you could have your home taken from you by your lender (foreclosed).

Author: Geni Townsend

Mortgage Department