Financial Tips
6 tips for first-time home buyers
Buying a home for the first time can be scary and overwhelming, so it’s smart to do your research before you take the first steps of searching for a house or applying for a loan. Stanford FCU has online resources to guide you in your research. Read our helpful articles and check out these 6 tips below:
1. Decide what you really, really want
Unless you have millions of dollars, you’re going to make trade-offs. You won’t likely be able to afford that newly-remodeled 3+2 beautifully landscaped house with a big back yard in a fantastic neighborhood the first time. Maybe your budget means you’ll need to choose between a long commute to buy a 2+2 fixer upper or a nice 2+2 condo near your desired neighborhood. Be flexible!
2. Don’t fall in love
The perfect home doesn’t really exist. You know this in your head, but sometimes your heart makes you abandon all logic. Perhaps it was the amazing kitchen that made you overlook the fact that there was only one bathroom. Or maybe the exterior was so incredibly charming you didn’t care that you’ll never fit your queen bed in the master bedroom. Yes, in today’s market you definitely need to move fast, but be realistic and ask your real estate agent to help override your bad impulses.
3. Choose your real estate agent carefully
Just because your first cousin is now a licensed real estate agent doesn’t mean he has enough experience to negotiate a great deal for you. Don’t forget that he used to cheat at Monopoly. There’s a nationwide shortage of affordable housing, and you need a professional with experience in your local area to help you navigate, find and obtain the right home. Do your research, and ask trusted friends for a recommendation. Then meet with the agent to decide it they’re right for you.
4. Clean up your credit
Credit is king, and you can’t buy a great house at a great price with a low-rate mortgage when your credit score is 620. The average home price in the U.S. is $374,900, and it’s $1.3 million in the Bay Area. Lenders need to see that you can manage credit and feel confident that you’ll repay the large loan with no issues. So they will scrutinize your credit history. Make sure you understand your credit score (Stanford FCU provides all members with their updated score quarterly in Online and Mobile Banking), and you don’t have any negative information in your credit report. Learn more and get your free credit report at AnnualCreditReport.com.
5. Choose your lender carefully
The average home loan lasts about 11 years (even a 30 year mortgage) because homeowners move up from a starter home, move down from an empty nest, refinance and relocate. Mortgages are bought and sold as commodities, and not all lenders will work with a borrower if you get in trouble. Because credit unions are owned by their members, the last thing they want to do is foreclose on your home—they’ll do everything possible to help you stay there.
6. Don’t give up hope
If you’ve been searching, making offers, and getting discouraged, try to look at the bright side. You can continue saving more for your down payment, closing costs and reserves. And hopefully by the time you find the right home, you’ll have enough extra money to take care of some needed remodeling or landscaping!
