How To Be Successful As A First-Time Homebuyer

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Homeownership can be a great way to create stability for your future, but the process can feel intimidating if you’re a first-time buyer. After all, purchasing a home is a big deal that requires a great deal of organization, communication, and thoughtful decision making. It involves a significant sum of money and planning ahead, yet even with all the mixed emotions and stress involved, millions of Americans purchase new homes every year. So how do they manage it successfully?

One way to ensure a smoother home buying process is to enlist the services of an experienced mortgage banker, like the Karlton Govan Lending Team. While a real estate agent can assist you in your home search and negotiate with the sellers, a mortgage banker helps you find a mortgage option that works best for you and your family and facilitates the origination process. Developing a relationship with a trusted partner like the Karlton Govan Lending Team can help make this process easier and more efficient for you.

If you’re ready to give up on renting forever and start the hunt for your first home, there’s a lot to learn and this is the perfect time to get familiar with the basics of home buying. To guarantee you’re getting the right property for you and your lifestyle, take a look below to learn all you need to know to be successful as a first-time homebuyer!

Getting pre-approved

You’ll want to have a pre-approval letter in hand before you start your home search. Keep in mind that pre-qualified is not the same thing as pre-approved. Pre-qualified means a lender has pulled credit, but hasn’t verified any income, assets, or verified employment. Many agents and sellers won’t accept a pre-qualification letter. In fact, many real estate agents will only show homes to buyers with a pre-approval letter!

Getting pre-approved is free and can usually be done relatively quickly. Once your mortgage lender has the necessary documents to validate your income, assets, and credit, they will pull a copy of your credit report and FICO scores from all three major credit bureaus. That’s why it’s important to….

Maximize your credit score before you close

Your credit rating is the most important factor in the mortgage rate you’ll receive. The lower your score, the higher your rate will tend to be. There are things you can do now that will help boost your credit score in as little as 45 days. Doing so can maximize your score before you place an offer on a home.

Pay down your credit card balances – The amount of available credit you’re using on your credit cards is the credit utilization ratio, and makes up about 30% of your overall credit score. Only your payment history has a bigger impact on your score, at 35%. Paying your credit card balances below 15% of their limit can have a big impact on your overall score.

Don’t apply for new credit – Credit inquiries and new accounts each make up 10% of your score. If you’re able to, hold off on getting a new credit card or a new car until after you’ve already closed on your home!

Contact creditors about any collections or late payments – If you know you have collection accounts on your credit report, you can contact the collection agency and see if they will remove the delinquent account if you pay it off. If you request it, creditors may also remove late payments as an act of goodwill.   

It’s important that you be completely honest with our team about your credit. Knowing all the good, the bad, and the ugly up front makes it easier to address any potential issues for you as a homebuyer. The more we know, the better prepared we’ll be to get you into your own home!

Buying the right home for you

Have some idea of the area you want to live in when you begin your search, but it’s also a good idea to remain open to surrounding neighborhoods. Similarly, know which features you want in a home in order of importance, but keep in mind that you may have to compromise a little when buying your first home. Part of that comes down to….

Nice yellow home

Knowing how much house you can afford

Your debt-to-income ratio is the most important factor to be aware of when you begin looking for homes in your price range. You can figure out your DTI ratio by adding up all your monthly debt payments (credit card payments, student loans, personal loans, etc.) and your estimated mortgage payment. Divide that number by your gross monthly income before taxes. For most mortgage loans, you’ll need a debt-to-income ratio of 45% or lower, but a 36% DTI ratio is considered ideal.

As a first-time home buyer, you may be unaware of all the additional monthly costs that are associated with a mortgage loan. In addition to your mortgage payment, you will likely have property taxes, private mortgage insurance, and homeowners insurance added to your monthly payment. Keep this in mind when you begin looking around!

Gather all necessary documentation

The mortgage process can be complicated, and requires quite a lot of paperwork. Not having all your documents in order leads to document requests from your mortgage lender that can delay your closing. To avoid this, gather all of the documents needed for your mortgage and submit them early on. These generally include:

  • W2 and tax returns from the last two years
  • Paystub for the past 30 days
  • Bank statements for the previous 2 months
  • Profit and loss statements if you are self-employed
  • Divorce decree, if applicable
  • Bankruptcy paperwork, if applicable

The bottom line in home buying

If this is your first time navigating a home mortgage, it can be confusing to sort through all the financing options. A good mortgage banker can help you decide how much home you can actually afford, then steer you through all the different programs and options.  The Karlton Govan Lending Team believes in the inherent value of homeownership and understands that every financial situation is unique. Our goal is to make the home loan process as easy and seamless as possible for you as we work towards the perfect mortgage and home for you!  

If you’re ready to take the first step towards becoming a homeowner in Memphis or the Mid-South, we’d love to talk to you about your current and long-term needs. Our experienced team is here to guide you through each step of the home buying process, so get in touch today to schedule an appointment! The home of your dreams is waiting for you!


Karlton Govan is a certified mortgage loan officer NMLS#652305