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Tips for 1st Time Home Buyers

YOUR FIRST HOME – Purchasing your first home is a rite of passage that most non-homeowners dream of.  The benefits of owning your own home helps you to build equity and is a tax break to most consumers.

1)  Pay off your debt.  The best approach is using extra cash to eliminate credit-card and other high interest consumer debt – even if that means you can put down less money on your future home.  Credit card debt will limit the amount of money you will be able to borrow.  Total monthly debt is not to exceed 40% of your gross income.  That includes payments for credit cards, student loans, car loans and homeowners insurance, taxes and a mortgage.

2) How much can you afford? There are two things that will determine that.  How much you can borrow and how much down payment you have.  Rule of thumb – Your annual mortgage payment, taxes and insurance shouldn’t exceed 28% of your gross income.  Determine how much money you have for a down payment and set aside 3% to 5% for closing costs.  Put some money aside for emergency repairs once you move into your new home.

3)  Types of Loans.  Now you are ready to shop for a house loan.  As a first time home buyer you will need a steady job and a good credit history to buy a home with less than 20% down payment.  The more money you have for a down payment the more options you will have.  If you have a down payment of less than 20% you will be required to pay for private mortgage insurance. Your premiums will depend on how much you put down and the type of loan you decide on.

4)  Questionable Credit?  Don’t have a perfect credit score?  Then you might qualify for loans that are insured by the Federal Housing Administration also know as FHA.  These loans are government insured and are more lenient that other lending companies.  You can put have a down payment as little 3.5% cash requirement.  

5)  Down Payment Assistance Programs. Need help with your down payment? Each year HUD gives states and municipalities money to distribute to low and moderate income families for housing.  Some may even offer grants.  To qualify for a down payment assistance program, a consumer can earn no more than 80% of a region’s median income.

View Current New Hampshire Seacoast Homes between $250k and $500k below

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