A Financial Primer for First-Time Homebuyers

EAP Navigator - June 2016

home for sale For first-time homebuyers, the more you understand about the entire process the more positive the experience is likely to be. Below are tips to help first-timers minimize their stress and maximize their investment:

-- Make yourself more attractive to lenders by reducing the amount of debt you’re carrying. The lower a potential borrower’s ratio, the more favorably a lender tends to view them.

-- Increase your credit score. A score of 750 or higher is “ideal” for potential borrowers.

-- Consider getting pre-approved for a mortgage. A seller who knows you’re pre-approved may be more inclined to accept your offer.

-- Find a way to dodge private mortgage insurance. If you’re close to being able to make a down payment of at least 20%, try to find the means to do so, such as by borrowing money from a family member.

-- Be careful of overspending on a home. Keep the mortgage/taxes/insurance at about 20-25% of gross monthly income.

-- Favor a fixed-rate loan over a variable-rate loan in order to lock in a low interest rate.

-- Take advantage of tax breaks. Talk to an accountant or financial professional about what tax benefits are available.