StreamLoan's Blog

Buying a home for the first time can be an intimidating, and at times scary process. The current COVID 19 pandemic has only made this process seem more stressful. However, there are a few basic tips and tricks, as well as online resources you can utilize, which will make buying a home for the first time a more approachable and pleasant experience, as it should be. Please see below 22 tips for a seamless first home purchase.

1. Utilizing an online, down payment calendar to help you set and calculate feasible goals for saving money is key. It is important to commit to putting down a set amount, and then saving a certain amount each month to go towards paying off a loan.  Putting down less money initially often leads to higher costs and insurance rates. Finding a reasonable down payment rate, and pairing this with a feasible budgeting plan helps to safeguard from overspending. Utilizing apps to track your progress, and using an automated savings plan are great strategies to start saving money for a new house, or to pay off a loan. Apps such as: Lending Tree, Credit Karma, Bankrate, and NerdWallet are incredibly helpful resources for this. 
2. Websites and apps like Lending Tree make starting the first time home buying process feel a bit more approachable, and less complicated. Lending Tree, a website and app, is an online loan marketplace which allows its users to access free mortgage options in sheer minutes. After asking a few preliminary questions, your responses will then be sent to Lending Tree’s lender network, and within minutes you’ll be able to view competing offers. It also offers invaluable resources like a home mortgage and loan calculator, all in one place.
3. Credit Karma offers a desktop website, as well as an app, which allows you to check your credit score for free, anytime, and anywhere. It also allows you to compare personalized offers for credit cards, loans, and more without harming your scores. Monitoring of your credit scores, insights, and recommendations are all at your fingertips. Signing up is completely free, and encryption is used to ensure privacy of your data.
4. Bankrate allows you to compare rates, crunch the numbers, and get expert guidance for pivotal financial decisions. It is also available free of charge, and signing up allows the user to access personalized news, actionable insights, and a host of other benefits. It offers over 200 calculators, which can be used to calculate everything from simple savings, home affordability, to mortgage payments.
5. NerdWallet is another online platform and app used by millions, which provides expert financial advice about mortgages. NerdWallet specializes in answering all questions related to mortgages, and through its mortgage hub, offers tools, articles, tips, and much more to lead you through every step of the way in your home mortgage process. One unique feature of NerdWallet is that it has a tool  which allows you to reach out and connect with multiple lenders, all in one place, and allows you to compare them.
6. Many local, state, and federal programs offer assistance for first time home buyers. Explore all mortgage options available to you. There are various mortgage options which are tailored to certain groups with specific financial needs. VA (Department of Veterans Affairs) loans are available to those who have served in the armed forces, and often require no down payment at all. Websites such as Veterans United Home Loans can be used to see whether you qualify for such a type of loan. Secondly, federal housing loans, also called FHA loans, are supplied by the federal government, and are geared towards low and medium income home buyers. The official FHA website can help you determine whether or not you may be able to receive this type of loan. Last but not least are conventional loans. These loans are not governmentally backed, and are provided by a private lender, or one of two government sponsored lenders: Fannie Mae or Freddie Mac. They tend to have higher interest rates than governmentally backed loans, such as FHS loans. However, they tend to have a higher approval rate than other types of loans.
7. Some other loan options to consider are jumbo and interest-only loans. Something to keep in mind is that loans come in many sizes and shapes, and are meant to be tailored to the many financial circumstances buyers may have. Jumbo loans are generally used to pay for properties that more conventional loans do not cover, such as more expensive and larger homes. Homes that qualify for jumbo loans are usually a bit over five hundred thousand dollars in the U.S.  If you are looking to purchase a home that is very high in property value, you may need to look at this type of loan. With interest-only loans, buyers generally pay only the interest rate on a home for the first few years, while the principal balance of the home remains unchanged. Initially, this can mean a much more affordable cost. Additionally it is often faster to pay off than a conventional loan. However, often after the lower introductory rate expires after a few years, people are burdened with a much higher interest rate, similar to those of conventional loans.
8. One critical thing to keep in mind when choosing a mortgage option is that higher down payments usually mean lower monthly payments, and vice versa. Having a higher down payment may mean you have to put less money down on your mortgage in the future. Choose the option which will best accommodate your current situation, as well as future prospects.
9. Make sure you are closely monitoring your credit. Try to cut down on your credit card bills as much as possible, as well as frequently monitoring and checking for any erroneous charges, or credit card fraud. This will help you to save time, money, and hassle in the long run.
10. Make sure the homes that you are looking at are within your price range. Your dream home might not be the first house you own. It may be worth it, at least initially, to look into homes that are on the cheaper side, as you may have additional costs that arise after move in. When deciding on a price range for buying a new home, be sure to account for repairs, or other appliances that may be needed in a home. Through careful spending and saving, you will one day be able to buy your dream home, even if you can’t buy it right away.
11. Make sure you are getting rate quotes from at least three lenders before you settle. That way, you can prevent over paying on a mortgage rate, and can leverage the various quotes that you get for a better deal across the board.
12. Get a pre-approval letter, to segway the process of acquiring a home loan. Most competitive real estate markets require a pre-approval letter to seal the deal. Sometimes real estate agents will require it, or assume you’re not qualified if you do not have a pre-approval letter. Overall, it’s an upfront way of showing you’re a reliable buyer who has done their research, and, at the very least, could give you headway among other potential buyers who haven’t done the same thing.
13. Many buyers are often confused about the difference between a pre-qualification and pre-approval letter.  Both are an essential part of the beginning of the loan process, but often get mixed up with one another. While both signify that you are most likely to be loaned a certain amount of money from a lender if you receive them, they are not synonymous with one another. In Investopedia’s article titled, “Pre-Qualified vs. Pre-Approved What’s the Difference”, the nuances between pre-approval and pre-qualification letters are summarized. To break it down in the most simple of terms, pre-qualification is generally the first step, and pre-approval is the second step. Pre-qualification is a conditional statement to give you a mortgage. The pre-qualification process generally utilizes customer submitted and self-reported data which is not validated or verified, whereas the pre-approval process generally utilizes customer data that has been verified by a bank or lender. The pre-approval requires a more in-depth review than the pre-qualifying process. Pre-approval generally requires a closer examination of financial and personal data, and holds more weight.
14. Make sure your real estate agent has a good record. Be sure to check for reviews online on multiple websites, to ensure that your real estate agent is reliable. And, almost equally important, be sure they are somebody you get along well with. You will be having many important conversations with your real estate agent, so you want to make sure they’re a good match for you and your needs, as well as trustworthy.
15. Be sure to do your resource about specific neighborhoods you want to buy a home in. Houses in more desirable neighborhoods (i.e. safe, or close to high ranking schools) will tend to be more expensive, and also have neighborhoods with higher home values. Usually, these types of homes continue to rise in value. Some questions to consider before buying in a particular neighborhood are: Is this somewhere you could see yourself living? If you have a family, is it family friendly? Where are the nearest amenities, such as grocery stores and hospitals? How long is the commute to work? Be sure to rule out any homes which do not fit the bill. Some tools which can be used to help you identify homes which would meet all of the above criteria are: Zillow, Redfin, Trulia, Next Door, and City Data.
16. Tour potential homes in person, which you are considering buying. Or, if that is not currently an option, consider virtual home tours via Zoom or Facetime. Some real estate companies even allow the option of a “lights out” tour after 9 pm, where you can physically tour a home after hours, when there is limited traffic in the home. This is a good option, especially during COVID 19 times. Be sure to ask a lot of questions, such as the last time the house was refurbished, or last time the appliances were replaced and updated. Don’t be afraid to ask as many questions as possible, and to even request multiple viewings of a home. If possible, try to visit the home in person (check if there is a socially distant house touring available), as it’s important to carefully inspect a home for any odd smells, stains, or imperfections that may be hard to capture virtually.
17. If it is not possible to tour a home in person, or if you do not feel comfortable doing so, in light of the COVID 19 pandemic, consider utilizing iBuyer platforms for self-service, concierge visits, or virtual home tours. Opendoor, Offerpad, Keller Williams, Redfin, and Zillow are several of the players offering iBuyer services. Do note that each of these players only services specific markets, so pay attention to if they cover your desired market.
18. Be sure to negotiate before putting money down for a home. If renovations are needed, try to ask the seller to pay for them, or at least subsidize the cost.
19. Be sure to know your market: is it a buyer’s market, or a seller’s market? If it’s a seller’s market, and you try to negotiate too hard or incorrectly, you as a buyer will get burnt out over time. Real estate agents can, and should, know and have data to back up their hypotheses and perspectives.
20. Hire an inspector to inspect for things like black mold, termites, and bed bugs. Don’t be afraid to ask them to reinspect certain trouble areas.
21. Consider various home insurance providers, such as, Progressive Insurance, Matic Insurance, Hippo Insurance, Lemonade Insurance, or State Farm, to ensure that you invest in the provider that is the best fit for your needs. Look closely at cost, as well as the pros and cons that come with each home insurance provider and plan. Scan websites for reviews of each mortgage provider, and compare them.
22. Often home buyers are (rightfully) nervous when it comes to the large amount of money required to close on a house, such as the down payments, earnest money, closing costs etc. A 20% down payment is a good rule of thumb, as well as considering mortgage products that allow for lower or higher down payments tailored to your overall financial goals. A lesser known form of loans is called a “piggyback” loan (which was much more common pre-Financial Crisis), in which the borrower combines cash with a loan for the down payment, such as a 10% down payment in cash, complemented by a 10% second mortgage/Home Equity Line of Credit (HELOC).  These options are almost non-existent in post-Financial Crisis times, but there are some programs that are similar which are currently in place. Additionally, some mortgage products have a lower down payment option, not requiring private mortgage insurance, and are worth exploring as well, although they are generally more rare products to find.