As a first-time home buyer in Billings, you have many decisions to make. Hopefully, these 5 tips will serve as a guide for you when making your choices.
What mistakes do first-time homebuyers make?
One of the most common mistakes is going in thinking they know it all and not asking enough questions from their Realtor about the process or mortgage lender. The more prepared you are it will reduce stress and anxiety significantly. Starting early is vital to avoid missing out on properties because there isn’t enough time left before the close of escrow. Make sure you get pre-approved for your loan! The faster you can get into a contract, the faster an offer date can be set, and negotiations begin with the seller, and that’s where all the money is made.
How much should a first-time homebuyer have saved?
A general rule of thumb is 6 to 8 percent of the purchase price. Still, it depends on your financial situation, comfort level with credit, and down payment resources available to you. If you can save 20% or more, you will be in good shape for negotiating leverage with the seller by offering a total price plus in some cases! The sellers are often very motivated when they get total value for their house in cash, which can be your advantage as a buyer! Willingness to pay always helps close escrow faster.
How much should a first-time homebuyer put down?
This can vary depending on the loan program you choose, but usually, it’s an amount equal to 20% of the purchase price. The reason for this is so you will qualify for maximum finance rates and avoid private mortgage insurance (PMI). If there is additional equity in your new home, it may be wise to cash out some to use as a down payment or closing costs. This money should be handled carefully to ensure the best results for your situation.
What do lenders look for in first-time homebuyers?
Credit score above 700, stable employment history, verifiable monthly income, sufficient assets for reserves after settlement, etc…when lending to someone with little experience buying a property it’s important they prove their credit history and ability to repay the loan. First-time homebuyers are often very responsible. They look to get a home they can afford for many years. Still, it takes preparation and realistic expectations to get approved for your first purchase.
Why is it preferred to finance locally rather than nationally?
Many people would like to finance their mortgage through another bank or institution outside of Billings. Still, typically that doesn’t work out in their favor. Suppose you use a local lender here in Billings. In that case, they will be able to offer rates and terms better suited for the Montana real estate market because of local knowledge and relationships with other lenders here locally. Due to underwriting guidelines, you may not qualify for specific loan programs if you don’t live close by. Not all lenders in Billings are willing to communicate with agents and clients with the same urgency, so make sure you choose wisely!
This article is an overview of 5 tips for first-time homebuyers, building a custom home or buying a property through Montana real estate.