First-Time Homebuyer Assistance Program Application Checklist: Fill & Download for Free

Buying a home can be nerve-racking, especially if you're a first-time home buyer.These tips will help you navigate the process, save money and avoid common mistakes. We organized them into four categories:Mortgage down payment tips.Mortgage application tips.House shopping tips.First-time home buyer mistakes to avoid.Mortgage down payment tips1. Start saving for a down payment earlyIt’s common to put 20% down, but many lenders now permit much less, and first-time home buyer programs allow as little as 3% down. But putting down less than 20% may mean higher costs and paying for private mortgage insurance, and even a small down payment can still be hefty. For example, a 5% down payment on a $200,000 home is $10,000.2. Explore your down payment and mortgage optionsThere are lots of mortgage options out there, each with their own combination of pros and cons. If you’re struggling to come up with a down payment, check out:Conventional mortgages that conform to standards set by the government-sponsored entities Fannie Mae and Freddie Mac, and require as little as 3% down.Federal Housing Administration loans, which permit down payments as low as 3.5%.Veterans Affairs loans, which sometimes require no down payment at all.3. Research state and local assistance programsIn addition to federal programs, many states offer assistance programs for first-time home buyers with perks such as down payment assistance, closing cost assistance, tax credits and discounted interest rates. Your county or municipality may also have first-time home buyer programs.Mortgage application tips4. Determine how much home you can affordBefore you start looking for your dream home, you need to know what’s actually within your price range. Use this home affordability calculator to determine how much you can safely afford to spend.5. Check your credit and pause any new activityWhen applying for a mortgage loan, your credit will be one of the key factors in whether you’re approved, and it will help determine your interest rate and possibly the loan terms.6. Compare mortgage ratesMany home buyers get a rate quote from only one lender, but this often leaves money on the table. Comparing mortgage rates from at least three lenders can save you more than $3,500 over the first five years of your loan, according to the Consumer Financial Protection Bureau. Get at least three quotes and compare both rates and fees.As you’re comparing quotes, ask whether any of the lenders would allow you to buy discount points, which means you’d prepay interest up front to secure a lower interest rate on your loan. How long you plan to stay in the home and whether you have money on-hand to purchase the points are two key factors in determining whether buying points makes sense.7. Get a preapproval letterYou can get pre-qualified for a mortgage, which simply gives you an estimate of how much a lender may be willing to lend based on your income and debts. But as you get closer to buying a home, it’s smart to get a preapproval, where the lender thoroughly examines your finances and confirms in writing how much it's willing to lend you, and under what terms. Having a preapproval letter in hand makes you look much more serious to a seller and can give you an upper hand over buyers who haven’t taken this step.House shopping tips8. Hire the right buyer's agentYou’ll be working closely with your real estate agent, so it’s essential that you find someone you get along with well. The right buyer's agent should be highly skilled, motivated and knowledgeable about the area.9. Pick the right type of house and neighborhoodYou may assume you’ll buy a single-family home, and that could be ideal if you want a big yard or a lot of room. But if you’re willing to sacrifice space for less maintenance and extra amenities, and you don’t mind paying a homeowners association fee, a condo or townhouse could be a better fit.But even if the home is right, the neighborhood could be all wrong. So be sure to:Research nearby schools, even if you don’t have kids, since they affect home value.Look at local safety and crime statistics.Map the nearest hospital, pharmacy, grocery store and other amenities you’ll use.Drive through the neighborhood on various days and at different times to check out traffic, noise and activity levels.10. Stick to your budgetLook at properties that cost less than the amount you were approved for. Although you can technically afford your preapproval amount, it’s the ceiling — and it doesn’t account for other monthly expenses or problems like a broken dishwasher that arise during homeownership, especially right after you buy. Shopping with a firm budget in mind will also help when it comes time to make an offer.In a competitive real estate market with limited inventory, it’s likely you’ll bid on houses that get multiple offers. When you find a home you love, it’s tempting to make a high-priced offer that’s sure to win. But don’t let your emotions take over. Shopping below your preapproval amount creates some wiggle room for bidding. Stick to your budget to avoid a mortgage payment you can’t afford.11. Make the most of open housesWhen you're touring homes during open houses, pay close attention to the home’s overall condition, and be aware of any smells, stains or items in disrepair. Ask a lot of questions about the home, such as when it was built, when items were last replaced and how old key systems like the air conditioning and the heating are.If other potential buyers are viewing the home at the same time as you, don’t hesitate to schedule a second or third visit to get a closer look and ask questions privately.First-time home buyer mistakes to avoidWith so much to think about, it’s unsurprising that some first-time home buyers make mistakes they later regret. Here are a few of the most common pitfalls, along with tips to help you avoid a similar fate.12. Not budgeting for closing costsIn addition to saving for a down payment, you’ll need to budget for the money required to close your mortgage, which can be significant. Closing costs generally run between 2% and 5% of your loan amount. You can shop around and compare prices for certain closing expenses, such as homeowners insurance, home inspections and title searches. You can also defray costs by asking the seller to pay for a portion of your closing costs or negotiating your real estate agent's commission. Calculate your expected closing costs to help you set your budget.13. Not saving enough for after move-in expensesOnce you've saved for your down payment and budgeted for closing costs, you should also set aside a buffer to pay for what will go inside the house. This includes furnishings, appliances, rugs, updated fixtures, new paint and any improvements you may want to make after moving in.14. Buying a home for today instead of tomorrowIt's easy to look at properties that meet your current needs. But if you plan to start or expand your family, it may be preferable to buy a larger home now that you can grow into. Consider your future needs and wants and whether the home you’re considering will suit them.15. Passing up the chance to negotiateA lot can be up for negotiation in the homebuying process, which can result in major savings. Are there any major repairs you can get the seller to cover, either by fully handling them or by giving you a credit adjustment at closing? Is the seller willing to pay for any of the closing costs? If you’re in a buyer's market, you may find the seller will bargain with you to get the house off the market.16. Not knowing the limits of a home inspectionAfter your offer is accepted, you’ll pay for a home inspection to examine the property’s condition inside and out, but the results will only tell you so much.Not all inspections test for things like radon, mold or pests, so be sure you know what's included.Make sure the inspector can access every part of the home, such as the roof and any crawl spaces.Attend the inspection and pay close attention.Don’t be afraid to ask your inspector to take a look — or a closer look — at something. And ask questions. No inspector will answer the question, “Should I buy this house?” so you’ll have to make this decision after reviewing the reports and seeing what the seller is willing to fix.17. Not buying adequate homeowners insuranceBefore you close on your new house, your lender will require you to buy homeowners insurance. Shop around and compare insurance rates to find the best price. Look closely at what’s covered in the policies; going with a less-expensive policy usually means fewer protections and more out-of-pocket expenses if you file a claim. Also, flood damage isn’t covered by homeowners insurance, so if your new home is in a flood-prone area, you may need to buy separate flood insurance.

—C H O O S I N G—Tips that will help you decide which home to buyKey takeaways:Make a list of why you’re looking to purchase a home and prioritize your needsDetermine a budget for your purchase and take overlooked costs into accountTo decide on a neighborhood, look at daily commute times, local culture, research school districts and the home's proximity to amenities and other points of interestWhat are some important considerations for buyers?Buying a home doesn’t need to be an overwhelming process. With proper planning, you too can find the home that will make you happy for years to come.Since the typical homebuyer lives in their home for an average of 13 years, it’s important to plan for possible future lifestyle changes. This may have an impact on the type of home you choose to purchase, such as a single-family home, a condominium or a home with investment possibilities.A better understanding of your reasons for wanting to buy a new home will simplify your search. Some of the most common motivations for buying a new home are:Adapting to lifestyle changesDesire to move to a different neighborhoodMoving closer to a job or familyAccommodating a growing familyImportant home features to considerSize of the homeSchool districts and programs offeredNumber of bedroomsFloor planNumber of levelsYard and lot sizeDistance to amenitiesMaking a list of your goals and ranking them in order of importance may help you in selecting a new home.How do I determine how much home I can afford?When determining a budget for buying a home, you need to:Set aside a fixed amount for your down paymentIdentify and plan for your estimated monthly mortgage paymentsYour mortgage lender can help you set realistic expectations for these two figures, but only you know what your month-to-month budget is really like. What you qualify for and what you can actually afford may be entirely different—it’s ultimately your responsibility to avoid spending more than you should.Additionally, when buying a home, many people plan on making changes to the property. This is a great way to turn a house you like into a home you love. But it’s important to keep in mind recurring expenses associated with homeownership, especially if you are including renovations in your budget.Home expenses that are often overlookedUtilitiesMaintenanceUnexpected repairsProperty taxesHomeowners insuranceHomeowners' association (HOA) feesEveryone has different goals when shopping for a new home. These financial factors can help you realize your goals and narrow the search for your purchase.How do I choose a neighborhood?As the famous phrase goes, it’s all about location, location, location! A property’s location usually has a huge influence on its market value.As you become serious about buying your own home, it’s important to narrow down your search to locations that match your specific lifestyle and personal preferences. To do this, you’ll need to take into account variables like the property’s proximity to stores, highways, busy roads, schools, airports and other points of interest. If you have children, it’s a good idea to thoroughly research the area’s school districts—GreatSchools.org can help. For general neighborhood demographics, take a look at the latest US census. For neighborhood walkability, you can use WalkScore.Once you’ve figured out where you want to live and how much you can spend, you’re ready to move on to the next step! It’s time to get pre-approved for a home loan.—E V A L U A T I N G—What is a home inspection?Before buying a home, you should retain your own professional home inspector to inspect both the home and property, even if the seller provides you with existing reports. A home inspection by a trained inspector will reveal any safety issues and major or minor defects that could lead to problems or repairs in the future. The inspector will check the condition of the home in areas you may not be able to see or easily access, like the roof. Choosing a qualified inspector is critical and sites like Angie's List can provide you with accurate reviews to use in your search.A typical home inspection lasts between two and three hours. It’s a great idea to be physically present during the inspection because:You can get a in-person explanation of any issues found by the inspectorYou will have the opportunity to ask questionsYou can see any concerns in person rather than in pictures on the reportMake sure to discuss the final home inspection report with the party who prepared them so that you fully understand any faults that were found.Inspections will vary depending on the inspector, however, the most important areas of an inspection are:Electrical: The inspector will look at the home’s main electrical panel to test the breakers and also ensure the use of safety outlets where appropriate.Plumbing: The inspector may take a look at the pipes, check drains and also check the home’s water pressure.Water heater: The inspector will inspect the water heater to investigate its current condition, its age and if it's properly secured.HVAC: The inspector will examine the heating, ventilation and air conditioning units to ensure their functionality and will also note any repairs that might be needed.Roof: The inspector will check the condition of the roofing material and look for any gaps in installation which could lead to water damage inside the home.Walls: The home inspector will check for any cracks which could be signs of unsettled ground. They will also look for any general damage to the walls or missing wall panels.Garage: The inspector will check the ventilation, foundation, lights and the garage door opener to ensure they’re all functioning properly.Drainage: The inspector will check the gutters of the home as well as the grade of the land to ensure the water drains away from the home and not towards it.Areas that may not be covered by the inspectionThese things may be beyond the expertise of your home inspector. For that reason, it's best to have a specialist take a look, if applicable.SewersTermitesChimneysGeological abnormalitiesAsbestos issues (in homes built before 1978)How can the results of a home inspection affect negotiations with the seller?When the inspection is complete, you will have good insight into the overall condition of the home. If major problems are found, you can:Ask the seller to fix the problems prior to the close of escrowNegotiate a lower purchase price due to the cost of repairsDecide against purchasing the homeWatch out for these potential deal breakersAsbestos: Left intact, undisturbed and unexposed, it's usually not a problem. However, if deteriorating and exposed, it is a serious health concern. Consult an asbestos abatement contractor for an expert opinion.Outdated electrical system: Replacing a home's electrical system can get expensive fast. Exposed or damaged wiring can make this even worse. It's best to pass on a home that needs significant electrical work, unless the seller is willing to reduce their price accordingly.Termite damage: Anytime the structure of the home itself is in question, you should be very wary. It's smart to move forward with a warranty from a termite company.Is the seller required fix problems identified during a home inspection?No. The seller is not required to fulfill the requests made by the buyer due to the results of a home inspection. If the seller refuses to accommodate your requests, a home inspection contingency ensures that you reserve the right to cancel the contract as long as you are still within time period defined by the purchase agreement.—N E G O T I A T I N G—Making sure your dream home doesn’t slip awayKey takeaways:Increasing your offer price isn’t the only way to stand outKnow when to walk away—just because you can buy it doesn’t mean you shouldIf it comes down to price, Home Savi can help!It’s not uncommon for homes to sell at or above asking price, especially in hot markets. While increasing your offer price is one way to win a bidding war, other factors can affect the seller’s decision as well.Beyond purchase price, a seller may be motivated by convenience or even emotion. If you’re in a competitive market and are looking to buy the home of your dreams, here are some tips on how to come out on top when there are multiple offers on the seller’s table.Get your financial ducks in a rowBefore you engage in a bidding war, it’s crucial to be pre-approved for a home loan. Sellers want to see commitment from the buyer and getting pre-approved is an excellent way to show that you’re serious about purchasing a home.Be disciplinedBe careful not to bid much higher than the market value of any property. If you're using an escalation clause that automatically increases your offer in response to other bids on the property, be sure to set an upper price cap and a limited time frame.However, just because you can outbid other buyers, doesn’t mean you should. If the final home price is significantly higher than the appraised value of the home, your home loan could be put in jeopardy. Be disciplined and know when to walk away from a bidding war, or it may just cost you in the long run.Reduce the hassleSellers care about convenience. Generally speaking, the fewer contingencies on your offer, the better. Try to reduce contingencies, but also know when to stand your ground. For example, never waive your right to a home inspection. You don’t want any surprises once you’ve committed to the transaction. Your goal is to find a balance between making the sale as efficient as possible and mitigating your risk level.Use the power of emotionSometimes, cash isn’t king. Sellers like to feel good about the people buying their homes. It’s in your best interest to be as cordial and likable as possible throughout the entire home buying process. Refrain from being overly demanding or critical of the home or its owners.Personalize your offer by attaching a letter about why you love the home you’re attempting to purchase. Include pictures of your family or a relevant personal story if possible—you never know what could strike a chord with the seller. Make the seller feel good about their home and even better about you.Home Savi can help!Our contracts are designed to put you in control of your savings. One useful way to use your savings is to up your offer price by the amount you're saving in commissions. Essentially, this could allow you to increase your offer price by 3% and outbid competing offers. For example, on a $500,000 home with multiple offers on the table for that asking price, you could offer $515,000 without actually paying more than someone offering $500,000 through an agent. In a competitive market, this puts you at a huge advantage.Learn to prioritizeDecide what your priorities are before negotiating and keep them private. Conceding on something that isn't a high priority could gain you valuable leverage elsewhere. Don't get hung up on every little detail because you usually can't have it all.Don’t hesitate to ask for what you want, but also keep in mind that the fewer contingencies you have, the more likely you are to successfully close the deal.How to get your priorities in orderThe easiest and most effective way is to simply make a list. Concentrate on listing the things that absolutely need to happen for you to purchase the home. During the negotiation process, focus on these things and be willing to let other things go. Compromising on areas that aren’t on your list will help you close on your home quicker.The art of negotiatingThere's no surefire way to get what you want from the seller, but there are some ways you can increase your chances.Be niceSometimes it really can be just that easy. Sellers are more likely to negotiate with someone who's likable and courteous, so it's smart to treat others like you'd like to be treated.Be transparentYes, keeping your cards close to your chest is a good tactic, but revealing certain information can greatly help with building trust. The trick is to be selective. The things you reveal don't necessarily even have to be related to the deal. As long as they help create an environment that promotes collaboration and mutual agreement, you're doing it right.Be willing to move onGetting too attached to one home can greatly reduce your negotiating power. Sometimes, no matter how appealing the home, it's best to walk away. If you really, really want to buy a home, don't let the listing agent or seller know that it's your dream home. This is a surefire way to throw all your negotiating power out of the window.—F I N A N C I N G—What does getting pre-approved mean?Being pre-approved for a mortgage means that a lender has reviewed your credit history and will likely approve you for a home loan. This pre-approval will tell you how much the bank is willing to lend you, as well as how much time you have to accept their offer. Getting pre-approved for a mortgage will help you in the home search and negotiation process.What are the advantages to being pre-approved?There are multiple advantages to being pre-approved for a loan including:Identifies a realistic home cost: Being pre-approved for a mortgage will allow you to know exactly how much you can borrow. This will save you time by identifying which homes you can afford and which are outside of your budget.Improves your image as a homebuyer: Being pre-approved shows the seller that you are a serious buyer and not simply another person looking around. It also tells the seller that you are capable of affording the home and that your offer probably won’t fall through due to lack of funding.Saves you time: Applying and getting approved for a mortgage takes time. If you get it out of the way before making an offer on a home, it will speed up the purchasing process allowing you to close the offer before another competing buyer steps in.Enhances your negotiating power: Pre-approved buyers have an advantage over offers from buyers that are not pre-approved. The seller is more likely to accept your offer, even if another offer is slightly higher. That’s because being pre-approved shows financial certainty. You can negotiate for better terms or better pricing.Once you’ve been pre-approved, you’re ready to start searching for your new home. When you find one you like, the next step is determining the correct offer price.Learn more about what documents you need to get pre-approved and contacting your lender to get a pre-approval letter.What to do if you get rejected for a home loanIf at first you don't succeed, try, try againKey takeaways:Make sure your credit score and debt-to-income ratio are the best they can beTake advantage of down payment assistance and low down payment programsDifferent lenders have different criteria—shop around til you find the best one for youGetting denied for a home loan, although inconvenient, is not the end of the world. The important part is to understand why you were rejected and work toward fixing the problem.Top reasons loan applications are rejected:Subpar credit scoresHigh debt-to-income ratiosInadequate down payment amountsLow appraisal valuesCredit scoreA poor credit score is the most common reason loans get rejected. To even qualify for most conventional loans, a score of 620 is required. If you have a lower score, you may be eligible for a Federal Housing Administration (FHA) loan. Don’t worry if your credit isn’t perfect; there are ways you can repair your score.Although errors can be difficult to find, they could very well be wreaking havoc from the depths of your credit report. Finding and fixing them can boost your score noticeably. Remember, you're entitled to a free annual copy of your report and should take advantage of this to sniff out potential discrepancies. It can take a month or longer to correct mistakes, but you can speed up the process by filing for a rapid rescore.If your credit score has no errors, it may just need some TLC. Make sure you’re borrowing within your means and paying your bills on schedule over the coming months. Eventually, with some discipline and time, your score will improve.Debt-to-income ratioThis ratio is as straightforward as it sounds; a ratio of monthly debts compared to monthly income.Simply put, lenders don't like to see high ratios. It signals to them that you're already up to your elbows in debt and that more debt on your plate may be too much for you to handle.At this point, you have a couple of options: attempt to pay off some debt and try again or speak with other lenders. Different lenders have different debt-to-income ratio requirements, which means that while one lender may decline you, another may be completely willing to loan to you. Don’t throw in the towel after talking with just one lender. Shop around until you find the right lender for you!Down paymentMost lenders prefer a 20% down payment. However, if you can’t scrape together 20%, there are ways around this long-standing (and some say outdated) tradition.Lenders like to see larger down payments because it signals that you're personally invested in the property, and therefore, more likely to keep up with payments. Agencies such as the FHA and Department of Veterans Affairs can help you lower your down payments.In general, the higher your down payment, the better. Dipping into retirement savings, receiving money from family and using down payment assistance programs are all ways to get funds fast, but should always be used responsibly.AppraisalA lower-than-expected appraisal value could also result in loan request rejection. When the property’s value isn’t high enough to back the loan, the lender will most likely decline your loan request.Unfortunately, appraisals tend to vary due to their subjective nature. Even though this is a reoccurring issue, a second appraisal is typically not allowed during the loan approval process. You can ask for an appraisal rebuttal, but they rarely end up working in your favor as a buyer.A common next step is to apply with a different lender, as you'll also get a new appraisal. Don’t be afraid to play the field with lenders until you find the right one for you.Time for one more shotIt's no secret that using Home Savi is a great way to significantly reduce home buying costs. Representing yourself and saving big could be the final push you need to make your home ownership dreams a reality.Ready to give it another try? Before you go, learn more about how to find the best mortgage lender for you.