First Time Home Buyer Tips

Few things compare to buying your first home. At BHFCU, we want to ensure you’re as prepared as possible. We have several tips for when you’re ready to purchase your first home.
 

Research the market 

​Every housing market is different. As you begin to think about buying a home, you must first understand the average price of homes in the various neighborhoods you are considering. This will allow you to focus on your preferred neighborhood and set goals for the anticipated cash you’ll need to make the purchase (down payment and closing costs.)

The 28% rule is a great guide to follow when budgeting. This rule states you should spend no more than 28% of your monthly gross income on your mortgage. Calculate what a mortgage payment would look like for you here.

Save for down payment and closing costs

Your savings are the key to purchasing your first home. You will use this cash to put a down payment on a house and likely pay for closing costs. Down payments generally fall between 5% - 20% of the home’s price. This is not a hard rule; BHFCU can usually find an option for as little as 3%, and sometimes even 0%.

Closing costs can be negotiated with the seller and sometimes included in the amount you borrow. However, the stronger your savings, the stronger your buying power. While you want to know your market and budget for what you can afford, it’s a good idea to start saving for a down payment as soon as possible.
 

Build good credit early

The importance of building good credit cannot be overstated. Your credit score will factor into loan qualifications and can affect interest rates and loan approval. You can begin to build credit early by opening lines of credit (like a credit card or vehicle loan) and making regular payments. Remember not to overextend your debt: that new boat or motorcycle could prevent you from buying the home you really want.
 
As you get closer to applying for a mortgage and purchasing your home, it is a good practice to pause any new credit activities.
 

Find your realtor and lender

It’s essential to find a skilled realtor and lender whom you mesh with. Your realtor and lender will work as a team throughout the home buying process. They will be your trusted advocates. Asking around in your social circles is a great way to start the search. Personal referrals from people you trust are worth much more than online reviews.
 
Don’t know where to start? BHFCU’s team of mortgage experts has plenty of experience working with local real estate agents and a full array of loans. We can help you get started.
 

Research financial assistance programs

It’s important to know what assistance is available to you. In partnership with the South Dakota Housing Development Authority, BHFCU offers various first-time homebuyer programs to help you purchase your first home. Double-check with our team to find out if you qualify for any of these programs.
 

Secure mortgage pre-approval

There are several mortgage routes (traditional, in-house, secondary market, VA, FHA.) Your lender will be your guide to navigate which option is right for you and help you secure pre-approval (the amount the financial institution is willing to loan you.) With pre-approval secured, listing agents and sellers will take you more seriously.
 
These steps are just the tip of the first-time home buyer iceberg. At BHFCU, we have a dedicated team of mortgage professionals ready to assist you each step of the way. When you’re ready, we’re here for you. Connect directly to our mortgage lenders by calling 605-858-6520.


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