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9 Tips for First-Time Home Buyers

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by JSSB Mortgage Services Team

First-Time Home Buyers

1. FIGURE OUT WHAT YOU CAN AFFORD

Before you begin looking for your first home, you need to know what’s actually within your financial means. Determine how much you can safely afford to spend before proceeding with the mortgage loan process. Keep in mind that unless escrow comes into play, things like taxes and insurance payments can be expenses that are not considered by prospective home buyers and can cause considerable financial headaches down the road.

2. COMPARE YOUR LIFESTYLE TO THE HOME TYPE

Keep in mind, just because your current lifestyle may call for a small home, those plans might change. Transversely, just because you think you need a large home now doesn’t mean you necessarily should have one in the future. Think about your current lifestyle (family, career, accessibility, etc.) and consider how much of a change could occur in the future. Are you planning on living in this home forever or is this just a stepping stone? Either way, consider these factors and choose wisely when shopping for a home.

3. SAVE FOR YOUR DOWN PAYMENT

Even if you’re not immediately looking to buy a home, it’s never too early to start saving for a down payment for when you are ready. Common practice is to put 20% down, but many lenders now allow much less (First-Time Home Buyer programs can ask for as little as 3% down). However, putting down less than 20% may mean higher costs and even a small down payment can still be hefty; for example, a 5% down payment on a $250,000 home is $12,500. Are you finding it difficult to come up with a healthy down payment? First-time home buyer programs are plentiful, and JSSB offers them to those who qualify.

4. RESEARCH ASSISTANCE PROGRAMS

Many states offer assistance programs for first-time home buyers with perks such as tax credits, low down payment loans and interest free loans up to a certain amount. Use these in conjunction with the federal programs, and you can make your dream home a feasible reality.

5. KEEP YOUR CREDIT IN-MIND

Credit scores are often “king” when it comes to getting any kind of loan, especially a mortgage. Your credit score doesn’t just determine if you are approved or denied; it can also determine your term as well as your monthly payment. Know your score before you begin the process of taking out a home loan. Dispute any errors that could be dragging down your credit score and look for opportunities to improve your credit, such as making a dent in any outstanding debts.

6. AVOID CREDIT ACTIVITY

When one opens a new credit account (a loan or a credit card), most lenders will run a hard inquiry, which can temporarily drop your credit score slightly. Keeping this in mind, it is wise that if you plan on applying for a mortgage in the near future, you should avoid opening new credit accounts to keep your credit score from taking any hits that could play a role in your mortgage status, term, or payment.

7. RESEARCH ALL OPTIONS FOR YOUR LOAN

Will a 30 year fixed-rate mortgage right for you or should you cut it down? If you can afford larger monthly payments, you can get a lower interest rate with a 20-year or 15-year fixed loan. Determine if a 15-year or 30-year fixed mortgage is better for you. Or you may prefer an adjustable-rate mortgage, which is riskier but guarantees a low interest rate for the first few years of your mortgage.

8. ACCOUNT FOR CLOSING COSTS

Closing costs can be another expense for which first-time home buyers don’t account, which is can be bad considering these costs can be considerable in size (typically running 2-5% of your loan amount).

9. SAVE MONEY FOR AFTER YOU MOVE-IN

Just when you think you’ve saved all you can save, you realize you’re going to need amenities that make living in your house worth it! During the saving process, you should also set aside a buffer to pay for what will go inside the house such as furnishings, appliances, rugs, updated fixtures, new paint and any other touches you’ll want to have when you move in!

Disclaimer: You should not place undue reliance on any forward-looking statements.  These statements speak only as of the date of this blog article, even if subsequently made available by the Jersey Shore State Bank on its website or otherwise.  Jersey Shore State Bank undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this blog article.

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JSSB Mortgage Services Team

The Jersey Shore State Bank Mortgage Services Team is proud to be a top mortgage lender in the state of Pennsylvania. Serving the Central and North Central Pennsylvania regions, JSSB Mortgage Services has been proudly doing business with the regional communities for over 80 years.