We want to offer you information that genuinely helps you when you are a first time home buyer. We include tips and helpful links within this article for 10 things to know as a first time home buyer that you can act upon as you’re reading.

๐Ÿ“Š Credit Score to Buy a House

Your credit score is a significant number when it comes to securing a home mortgage loan. Most mortgage companies require a credit score of at least 620, but you may be able to get a loan with a lower credit score depending on other factors.

Credit Report with score

Loans from the Federal Housing Administration (FHA) require 580 and above, while most traditional lenders want a score of 640 or higher. While it is possible to buy a home with a lower credit score, the possibility for approval increases with a higher credit score.

Home buyers with a higher credit score may see benefits that include a lower down payment and lower interest rates. For this reason, it’s worth the time it takes to improve your credit as you move toward buying your first home.

Start by getting a copy of your credit report from Equifax, TransUnion, and Experian. We suggest getting all three because each one may have different information.

SUGGESTED: Buying a House in a Good Neighborhood

Due to the Fair Credit Reporting Act, you can get a free copy of your report from each agency once a year. Be sure to visit the official Annual Credit Report website to secure your copies.

Credit Dispute form with pen

Report any errors immediately because these can take time to clear up through the dispute process. Set up a budget to take care of delinquent accounts and bring them into good standing.

๐Ÿ’ต First Time Buyer Home Loan

First time home buyers have the advantage of various grants and programs that are meant to make buying a home more comfortable. Those who live in Virginia may qualify for a mortgage loan through the Virginia Housing Development Authority (VHDA).

The VHDA works with lenders like Fannie Mae, FHA, VA, and USDA. They also provide help through grants that include the Down Payment Assistance Grant (DPA) and the Closing Cost Assistance Grant (CCA).

Some first time home buyers may be eligible for tax credits. Keep in mind that to get some loans created to help first time home buyers in Virginia will require you not to take this type of tax credit to qualify.

๐Ÿฆ Fixed Rate vs. Adjustable Rate Loans

An adjustable rate loan begins with a lower interest rate for a set time, and when that period is complete, the loan switches to one with an interest rate that fluctuates with the current trends. This type of loan is suitable for those who may have more flexibility after several years of owning their home or plan to sell before the initial period is complete, but they will need to plan for monthly payments increasing and decreasing depending on current interest rates.

Percentages - Interest Rates

Most home buyers choose a fixed rate loan because it has a stable interest rate that does not change for the term of the loan. You can expect these loans to have a duration of 15 to 30 years, and they are perfect for those who aren’t planning to move from their home for many years and need a predictable monthly house payment.

SUGGESTED: Rent or Buy? Which is Cheaper?

๐Ÿ“„ Mortgage Loan Types

The world of home mortgage loan types can be confusing, but with a few foundational facts, you can walk into a lender with the knowledge that helps you get the right loan for your needs. No one loan fits all circumstances, so make sure you ask questions to get a clear idea of what to expect.

If you served in the United States military, you could qualify for a loan through the U.S. Department of Veterans Affairs (VA). You can receive a loan directly from the VA or have them guarantee a loan through a traditional lender. Learn more about specific VA loans here.

Loans backed by the Federal Housing Administration (FHA) come with lower down payments and may be a good option for a first time home buyer who doesn’t have substantial savings set aside for a home purchase. Homes purchased through this avenue must meet certain criteria and pass specific inspections. You can learn more about an FHA loan here.

White house with porch

Those who live in a rural area may be eligible for a loan through the United States Department of Agriculture (USDA) if they meet the criteria. There are income guidelines for these loans, but they generally come without a down payment. Find out more about eligibility requirements here.

Traditional mortgage loans that are received through a bank, credit union, or other lenders usually require a down payment that is 20 percent of the purchase price of the property. It’s a good idea to shop around for a home mortgage loan to make sure you’re getting the best terms.

๐Ÿงฎ Home Affordability Calculator

When it comes to what we want in a home, it’s easy for the cost of our wish list items to surpass a reasonable monthly mortgage payment. So, how do you know how much house you can afford?

We have good news for you! By putting a few numbers into our home affordability calculator, you can get an idea of how much you can afford when looking at homes to buy.

Using the mortgage calculator is easy. Simply input a target price for the home, expected down payment, interest rate, and term of the mortgage loan. You can include the Private Mortgage Insurance (PMI) cost estimation.

โœ” Pre-Qualification vs. Pre-Approval

It’s a good idea to get a mortgage loan pre-approval as soon as possible. There are several benefits to having a pre-approval letter as you move through the home buying process.

Mortgage Loan Application with Key on House Keychain

A pre-approval letter gives you valuable information on exactly how much money the lender is willing to supply for the purchase of a property. There’s nothing as disappointing as getting your heart set on a home that is outside of your target price range, and a pre-approval can help save you time when searching through locations without specific price ranges.

The pre-approval letter is an impressive piece of the puzzle you can provide to home sellers when you place an offer on a home. This letter shows the seller that you’re serious about the purchase and can follow through if they accept your offer.

A mortgage loan pre-qualification is not the same as a pre-approval, and knowing the difference can save you time. A pre-qualification gives you an estimate of the loan amount without the verification process, while a pre-approval comes after verification of information provided and is valid for up to 90 days.

๐Ÿ‘จโ€๐Ÿ’ผ Hiring a Real Estate Agent

Something that most buyers are unaware of when they decide to purchase a home is that they don’t have to pay money for the services of the real estate agent they choose! The seller pays all real estate agent commissions, so you can move that cost concern from your list.

We can help!
We strive to make our clientโ€™s real estate transaction an overall great experience. Our business model is deeply founded in the fact that it is all about the experience! Give us a call at 804-396-4625.

Without the consideration of needing to pay a commission, it makes sense to have a real estate agent on your side to handle all the details related to the home buying process. We would love to be the real estate agent team that represents your interests.

๐Ÿ’ฐ Escrow & Closing Costs

You’re probably aware that you need a down payment saved to cover a percentage of the home’s cost, but you may also need to have funds for the escrow account requirements and closing costs. Once we know the type of mortgage loan and other home purchase details, we’ll be able to advise you more specifically on this point.

Money is placed in escrow to cover things like homeowner’s insurance, taxes, and mortgage payments. The escrow account is managed by a third party agency and is usually paid when you make an offer on a home.

Closing costs include things like administrative fees, inspections, and appraisals. No one company that decides what the total is for closing costs because each charge is for individual services provided by different businesses.

๐Ÿ  Searching Homes for Sale

We recently asked a home buyer what one thing they wished they knew before purchasing a home. They answered, “I wish we had looked at more houses.” They were so excited about buying a home that they got swept up in the excitement of the experience and neglected essential things like location and unique features.

find the home of your dreams

We suggest that you create a wish list that includes everything you dream of in a property. Go back through that list and make a note beside those that are so important you feel are beyond compromise. This list will help you stay focused as you look at homes.

Make sure you sign up for email notifications with our free service. This service is vital in today’s competitive real estate market when inventory is low. You want to know the moment new homes are listed!

๐Ÿ”Ž Open Houses

Open houses are great ways to get the inside view of a home without pressure. We’ll go along with you and handle asking any questions you have about the property.

We recommend that you let us ask questions because we have the experience in knowing what to ask and how to ask it so that it places you in the best position should you be interested in placing an offer at some point. We won’t need to deal directly with the seller or their real estate agent.

SUGGESTED: Newest Homes JUST LISTED!

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10 Things to Know as a First Time Home Buyer
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10 Things to Know as a First Time Home Buyer
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Get useful information & take action with these 10 things to know as a first time home buyer. Ready to buy a house? Call The Wilson Group at 804-396-4625.
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