FIrst-Time Home Buyers
7 Steps for First-Time Home Buyers
Buying your first home is an experience filled with many emotions and many more decisions. One of the first decisions is finding the right lender who you trust to guide you through the journey from pre-approval to closing.
This is even more important here in the Pacific Northwest, one of the hottest real estate markets in the country. A first-time home buyer needs to start working with a lender long before touring homes with an agent, so you are ready and prepared to make your strongest offer. The sooner you connect with a lender, the easier it will be to understand all your options and start mapping out your personal path to home ownership.
Who is Considered a First-Time Homebuyer in Washington?
First-time home buyers are eligible to receive many financial advantages, and you might not realize that you could qualify for a loan assistance program based on that status.
In Washington, a first-time homebuyer is classified as any individual who has not owned and occupied a primary residence during the previous three years.
Other conditions include:
- If you've owned a home, but your spouse has not, then you can purchase a place together as first-time homebuyers.
- A single parent who has only owned a home with a former spouse while married.
- A displaced homemaker who has only owned a home with a spouse.
- An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
- An individual who has only owned a property that was not in compliance with state, local, or model building codes—and that cannot be brought into compliance for less than the cost of constructing a permanent structure.
Once you and your lender have found the description that defines you, there are still a few steps to make sure you qualify for first-time homebuyer down payment assistance programs and determine what loan works best for you.
Step 1: Connect with an Experienced Lender
When working with an experienced lender like First Fed, mortgage experts will guide you every step of the way through the process, from finding the loan and potential down payment assistance programs that fit you the best to financial preparation to help you qualify for that funding. This makes the process of understanding the financial aspects of home ownership easier.
The mortgage lending team works with you to build a financial roadmap to prepare you for a successful first-time home purchase. This includes beginning with a financial checkup to determine what your starting point is. In order to qualify for the best rates available, you may want to take advantage of one of the credit building solutions on offer. Your mortgage expert will continue to guide you through the process and build a long-term relationship, so you have a resource throughout the entire purchase process.
First Fed home-buying solutions often include benefits of working with a direct lender bank. By keeping your finances in a single institution, you can enjoy more personalized service and some loans will carry fewer fees than typical mortgage brokers.
Step 2: Check eligibility for down payment assistance programs
Through this process, we will discover your eligibility for down payment assistance programs and the loan type for which you qualify. First Fed offers several options like the Home Possible program and their newest program, WSHFC Down Payment Assistance Loans. You also have access to many other government programs, like USDA loans and VA loans. An experienced lender can layer in multiple programs for benefits such as low down payments, or even 0% down, on your home purchase.
The next steps are understanding your credit scores, debt-to-income ratio (DTI), and your net income; these are significant factors in determining what mortgage you qualify for.
Step 3: Build up your credit
A good credit score allows you to qualify for a lower interest rate. Generally speaking, you'll need a credit score of at least 620 to qualify for a mortgage loan. Understanding your credit score will help you develop a plan to improve your score, which can lower the overall cost of your mortgage.
If your score is low, you can build up your credit score through programs like First Fed’s Credit Builder Loan. The Credit Builder Loan allows you to invest in a certificate of deposit (CD) with the proceeds of a secured loan that can be repaid over one or two years. At the end of the time period, you will have established a steady record of payment which helps increase your credit score. Plus, you will have the full savings with accrued interest from the CD.
Step 4: Determine how much you can afford
Before you start looking at houses, it’s important to establish a reasonable price range. The last thing you want is to begin looking at homes, fall in love with one, and then discover the mortgage is more than you can afford. A First Fed mortgage expert can help you set a price range based on your income, debt, amount you have for a down payment, your credit score, and where you plan to live. Understanding how your income and potential liabilities are underwritten helps give you a clear picture of what you can qualify for.
Your DTI is all your monthly debt payments divided by your gross monthly income. This is one method banks use to determine how much you can borrow. This calculation is equally important to your credit score when looking to qualify for a mortgage.
As you take all these factors into account to determine the price range you can afford, don’t forget to add in additional expenses like closing costs and moving expenses. These can add up and feel significant if you’re on a tight budget.
Step 5: Work towards your savings goals
A good long-term goal for every first-time homebuyer is to ensure your financial security and work toward your future saving goals. First Fed offers CDs and high yield savings accounts that can help keep you on track. While hitting your savings goals for your new house is front of mind, it’s also important to remember your long-term savings goals and retirement plans so those plans aren’t derailed by your purchase.
Step 6: Understanding property types
As a full-service lending institution, First Fed loan experts can help you navigate the intricacies of different property types to find the best mortgage options for your needs. They offer loans for a variety of property types, including:
- Single-Family Homes
- Multi-Family Homes
- Manufactured Homes
- ADUs (Accessory Dwelling Units)
- Unique Properties
Step 7: Begin home search with experienced realtor
The home-buying journey can be long, and at First Fed, mortgage experts are with you every step of the way to set you up for success on your first home-buying experience. Starting with a lender first includes helping you find the right realtor partner to show you available houses and put together your offer.
With tight inventory, prices and rates on the rise, working with a First Fed mortgage lender as a first-time home buyer is more important than ever, so when your offer is accepted, you can look forward to a quick and easy closing.
Personalized Full Mortgage Services for First-Time Buyers
First-time home buyers in the Pacific Northwest face a robust housing market and competition for every listing. Unlike anywhere else in the country, more people are moving to Washington for high-paying jobs and its scenic beauty. Because this housing marketing attracts many first-time home buyers, being prepared is essential.
First Fed mortgage experts provide a personalized customer journey and a seamless user experience with honest, transparent communication from their team. To follow these steps and start the process of buying your new home, connect with one of the First Fed Mortgage Team members today.
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Fixed rates for buying a home as low as:
Purchase: Conforming Loan RatesApply Now
|Loan Term||Interest Rate||APR||Discount Points||Ex: Loan Amount||Ex: Monthly Payment|
|30-year Fixed Rate Purchase||6.875%||6.973%||0.500||$300,000.00||$1,970.79|
|15-year Fixed Rate Purchase||6.375%||6.513%||0.375||$300,000.00||$2,592.75|
Interest Rates Effective: 11/30/2023