If you’re prepping to purchase your first home, first-time homebuyer tips are practically required reading. But if you’ve owned a home or two in the past, why would you want to spend time reading advice for beginners? First, it never hurts to brush up, and if it’s been awhile since you made a home purchase, the market and its operations may have changed significantly. Plus, you might be pleasantly surprised to learn exactly who qualifies as a first-time homebuyer in the eyes of lenders. Why risk missing out on a potentially lucrative opportunity?
Who Is a First-Time Homebuyer?
First-time homebuyer seems like a fairly self-explanatory term, but don’t be fooled. Individuals buying their first homes aren’t the only ones that fall into this category. In fact, it’s possible to have owned multiple homes in the past and still qualify as a first-timer. While the definition varies from program to program, many lenders and programs aimed at first-time homebuyers use the standards set by the U.S. Department of Housing and Urban Development (HUD). According to HUD, anyone who meets any of the following criteria may be deemed a first-time homebuyer:
- A person who has not owned a primary residence in the three years prior or is married to someone who hasn’t owned a primary residence in the last three years.
- A single parent or displaced homemaker whose only previous homeownership experience involved joint ownership with their spouse during their marriage.
- A person who has only owned a primary residence that wasn’t up to code and could not be brought up to code without an investment exceeding the cost of constructing a permanent structure.
- A person who has only owned a primary residence that wasn’t properly fixed to a permanent foundation.
First-Time Homebuyer Tips
Whether you qualify as a first-time buyer or not, the following tips can help you achieve your housing goals:
1. Clean Up Your Credit
A low credit score can cost you when you’re searching for a home loan. As Credit.com points out, borrowers with lower scores will have a harder time gaining approval and will likely have to settle for a higher interest rate. That can add thousands of dollars to the total cost of your loan. Before kicking your house hunt into high gear, take some time to check your credit and fix any issues that are holding your score down.
2. Get Preapproved
Why should you put the loan before the house? Visiting a lender to get preapproved gives you a strong idea of what you can actually afford to borrow, according to Credit Karma. That should help you identify your price range, so you can focus on houses that won’t break your budget. As an added bonus, having a preapproval in your pocket generally puts you in a stronger position with sellers. They’re more likely to accept you as a serious buyer when you have proof that you can secure the funding necessary to purchase the home.
3. Explore Assistance Programs
Homeownership is generally seen as a positive. As a result, you’ll find a wide range of assistance programs at the federal, state, and local levels. While these programs serve various groups, many are intended to help first-time homebuyers. As NerdWallet reports, assistance programs can help pay for numerous costs, including the down payment and closing costs. Others offer assistance in the form of tax credits or discounted interest rates.
4. Do Your Homework
Before buying a home, you may want to head to class. First-time homebuyer classes cover topics suggested by HUD and give aspiring buyers a chance to learn how to navigate the homebuying process. According to NerdWallet, even experienced buyers often learn new things when they participate in one of these classes. Plus, completing the class may help you secure grants and other forms of assistance.
Are you looking for more first-time homebuyer tips? Reach out to PrimeLending Twin Cities. We’re delighted to offer multiple first-time homebuyer programs. Contact us today to discuss your housing goals and get started on your journey to homeownership.