Prep for Purchasing Your First Home

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Wednesday, March 25, 2015

Southbridge Savings Bank, Sponsored Content

Although this winter was long and tough in New England, first-time homebuyers were given ample opportunity to conjure up the house of their dreams; now, with the warmer weather, house hunting is picking up quickly. Scott Auen, Senior VP of Retail Lending at Southbridge Savings Bank, adds that it’s also the best time for serious first-time buyers to get their finances in order so the purchasing process goes as smoothly as possible. Here’s what he advises.

Kick it off with your credit score

Before anyone can get pre-approved for a loan, Auen advises that you find out your credit score – the number that indicates your debt and your bill-paying behavior. “Your credit score will reflect your credit for up to 10 years, so it’s very important to pay your bills regularly. A low credit score can hurt your chances at getting the best interest rate, or even at getting any financing at all.” Services like Experian, Equifax, and TransUnion are just three of the companies where you can keep up with your credit score and make sure yours is healthy.

 Seek approval

“Pre-approval is the smartest way to shop because it will tell you how much house you can realistically afford,” says Auen. The process involves simply filling out an application and providing documentation of your finances. Once you’re pre-approved, you’ll receive a certificate from your lender stating the amount of your loan. “The best part about getting pre-approved is that sellers appreciate that you’re prepared and ready to sign on the dotted line, often making them more inclined to consider your offer,” notes Auen. 

Understand the real cost

One of most important considerations when planning to buy a home is making sure that you understand that your monthly payments include more than just the mortgage. “There’s the principal, the interest, homeowner’s insurance, and sometimes real estate taxes all rolled in there,” comments Auen.  “And if your down payment is less than 20 percent, you may also have to take out Private Mortgage Insurance, although a helpful lender will try to see if you qualify for programs that don’t require the PMI.” Buyers should also remember to set aside enough to pay for closing costs, which may include the appraisal fee, loan fees, attorney’s fees, inspection fees, and the cost of the property’s title search. 

Know What You Want

Real estate agents are helpful, and you can always search online listings to find your dream home. Either way, a checklist of all the “must haves” for your dream home (e.g. 3 bedrooms, a big yard, etc.) will keep things simpler and prevent impulsive decision-making that could translate to additional dollars. 

Make an offer they can’t refuse, but don’t forget to inspect the goods

When making your offer, consider the asking price, recent home sales in the area, market conditions, and of course, how badly you want that house to be yours. “You want to make an offer that will entice the seller, but one that fits within your budget, too,” advises Auen. The offer made should be contingent upon a home inspection, so go out and hire a qualified professional to inspect your soon-to-be first home. Auen suggests that you should go along for the inspection. “It’s a good chance to ask questions and get to know how your new home works.” After the inspection, the bank will order its own appraisal to ensure the home is worth what you’re paying.

Lock in a good deal

Auen explains, “Fixed rate loans stay at the same rate for the entire life of the loan, so you have a consistent number for your monthly budget. Adjustable rate loans typically start with a lower interest rate and may go up over time, but both are good in the long run depending on your circumstances.” Be sure to explore and understand both types. 

Auen adds that his best advice for first-time homebuyers is to have professionals by their side. “Pros definitely make the process easier. Find a good realtor, a meticulous inspector, and a knowledgeable lender, and you’ll be ahead of the game.” Fortunately for homebuyers in Central Massachusetts, there are plenty of options, including the knowledgeable and experienced NextDoor Lending Team led by Auen at Southbridge Savings Bank. “Our loan officers are invested in the community because they live here,” says Auen. “We know that every time we help someone finance a home, we’re making the region stronger.”

This article was written by Southbridge Savings Bank as part of an ongoing sponsored content series.

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