Are you a first time home buyer in Kansas City or thinking about getting prequalified? If so, you’ll want to read this article in its entirety. In this article, you’ll learn nine essential tips to help you get qualified for your first home and make it to the closing table.
Preparing to buy your first home can be a stressful yet exciting experience for any person(s). There are several components encompassing the first time home buyer process, and we want you to have a leg up so you can avoid the many pitfalls that people face without proper direction.
Below are nine essential tips to help any first time home buyer in Kansas City. You will want to grab a pen and paper and write these tips down. They will help you save both time and money in the future.
Let’s get started!
Eliminate Debt
After doing extensive research, one of the fastest ways to eliminate debt is to employ the “Debt Snowball“ method, which essentially means that you should spend any additional money you may have or earn on paying off your debts from lowest to highest balance. For example, if you have a credit card balance of $3,000, and a remaining auto loan balance of $10,000, you would pay off the credit before paying off your auto loan.
Moreover, debt elimination will not only help you qualify for a better home but also improve your credit score and debt to income ratio. If you have the financial wherewithal, you should also consider paying more than the minimum payment each month, and stop using your credit cards altogether.
Improve Your Credit
Credit is always the elephant in the room when it comes to financing anything, especially a house. The better your credit score, the lower your interest rate. If you want to improve your credit score, you need to consider a few things. Are you making on-time payments every month? Paying your debts on-time is considered “High Impact” on your credit report, so make sure you are making your payments on time.
A new strategy for improving your credit is the ability to reap the benefits of paying your utility and cell phone payments on time through Experian Boost. You can learn more about this new feature by clicking HERE. Additionally, the number of new accounts you open should also be limited. Too many hard inquiries can negatively impact your credit score. If you have accounts open that you are not using, it is best to keep those accounts open. Closing an account will negatively affect your credit utilization ratio, so make sure the balances are at zero before you stop using them. Furthermore, if you see something on your credit report that you do not agree with, file a dispute to have it removed.
Save For a Down Payment
To qualify for your first house, you’re going to have to put a little skin in the game. What do I mean? I’m talking about a down payment, which is required anytime you purchase a house. Here are some helpful tips on how to save for a down payment:
- Transfer a budgeted amount of money into a separate savings account and commit to never spending it.
- Avoid unnecessary expenses and vacations
- Sell some of your unwanted belongings (garage sale or pawn shop)
- Work overtime at your job or pick up a second one
- Look into down payment assistance programs
- Borrow from your 401(k)
Get Pre-Approved
Being a first time home buyer in Kansas City comes with a few challenges. The process of getting pre-qualified can make or break a deal in today’s seller’s market. Working with your lender to get pre-approved is a crucial step in getting to the closing table. Schedule a time to speak with someone who can help you get pre-qualified so you know what you can afford.
Find a Good Agent
Once you’ve completed the pre-approval process, you’ll want to connect with a local agent to help you find homes in your area of choice and schedule showings. Staying in touch with an agent could mean the difference between finding a home and not finding one.
Make an Offer
Once you’ve found the home of your choice, you are ready to make an offer. To make an educated offer, you will want your agent to look up comparable sales within a mile radius of the subject property. The best “comps” are those within a quarter of a mile from the subject property with the same number of beds, baths, and within 10% plus or minus the square footage. When you find similar comps in the area, price your offer based on your findings. If there are other interested buyers, you may have to bid over the asking price to win the bid.
Apply For a Mortgage
After winning a bid, you will need to think about what type of loan you’re going to apply for and how long of a term you want (15 or 30 years is the most common). You can also see how much your payments will be if you refer to a mortgage calculator. Click HERE for a free amortization calculator.
Order Inspection
If you have made it this far, it means you are almost done, but not until you order an inspection. A general home inspection will give you a general overview of the inner workings of the home. Understanding the condition of the property is important and you should consult with your agent about any findings or concerns you may have.
Close
When it’s time to close on your new home, you’ll want to do a final walkthrough to make sure there are no additional damages or concerns. Then, you’ll need to carefully read all the paperwork including the fine print (terms and conditions). If you do not understand what you are reading or you have any questions, ask your real estate agent to explain it to you. It’s better to know than to have lingering questions.
In Conclusion: How to Become a First Time Home Buyer in Kansas City
As you can see, preparing to buy your first home can take quite a bit of time. You will want to follow the advice as outlined above to aid you in buying your first home. We encourage you to share this information with your friends and family so they too will have a better understanding of the process and how to save time and money going forward. To receive new content when it arrives, continue to follow our blog page.
If you’re looking for a REAL, accredited local buyer in Kansas City, we are here for you.
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