5 Things to Research Before Buying Your First House

buying your first house

The process of buying your first house can feel a bit like getting stuck in a maze. You know there’s a way out and that it’s only a matter of time before you get there, but the seemingly directionless wandering can get old pretty quickly.

However, when you walk into the home buying process with the right research at your side, you’ll be able to confidently navigate each fork in the road and end up exactly where you want to be.

To help you along the way, here are five things you’ll want to focus on in your home buying research:

Average Credit Score for First-Time Homebuyers

Your credit score may only be a three-digit number, but it plays a crucial role in the kinds of homes and mortgages you’ll be able to pursue. For example, “An FHA loan requires a minimum FICO credit score of either 580 or 500 depending on your down payment,” while other loans (like the kind endorsed by the U.S. Department of Veterans Affairs) don’t have a required score at all. 

Generally, though, lenders expect homebuyers to have a score around 620, with 580 often being the minimum score a lender will accept. If you’re looking to apply for a jumbo mortgage loan, however, you’ll need to have an especially high score, as these loans involve the lender taking more of a risk.

The First Time Homebuyers Guide

How Much Your Down Payment Should Be

You’ve probably heard before that the standard down payment for first-time homebuyers and home buying veterans alike is 20%. However, as good as a higher down payment is, the standard has begun to drift away from 20%. Instead, the average down payment in 2019 “was 12% for all buyers, 6% for first-time buyers, and 16% for repeat buyers.”

With that said, many lenders are still looking for buyers who can afford a down payment that’s as close to 20% as possible. Like Forbes says, “If you provide more than a 20% down payment it sends a signal you can afford the mortgage and thus are less likely to default, leaving the lender on the hook with the property.”

Mortgage Rate Trends

Rates are in a good place right now. According to Nerd Wallet, “Mortgage rates have lingered around 4% APR for months now,” and that trend shows no signs of changing anytime soon.

This is good news, as getting a mortgage rate around 4% annual percentage rate (APR) is nothing to scoff at. Still, your home buying research should always cover the newest mortgage trends, as trends can differ based on a variety of factors (the housing market, the location you’re house hunting in, level of economic growth, etc.).

The Right Home Loan Program For You

The type of home loan program you go with is arguably the most important decision you’ll make when buying your first house. There are pros and cons to each type of loan, and it’s ultimately up to you to decide which one best fits your situation. So, when it comes to things to know before buying a house, it’s essential that you become familiar with the different programs available to you.

For example, if you’re confident that you’ll be settling down for a while, then a fixed-rate mortgage may be the best option for you. But if you can afford to pay a little more on a month-to-month basis, and have your heart set on a specific property, then an adjustable-rate mortgage may be better suited to your needs.

As always, though, one of the best first-time homebuyer tips you’ll encounter is this: do your own research. No one knows your situation better than you do, so take some time to do your home buying research, look into your financials (and consult with a professional if you need some extra insight), and then use that information to guide your decision.

The Time it Takes to Close

Finally, you’re also going to want to research how long it could take to close when buying your first house. Timelines can fluctuate depending on the length of the loan underwriting process (and whether any revisions are needed), so it might ease your mind to get a ballpark idea of how long closing on a mortgage for your first house can take.

“Most federally related mortgage loans can close within 30 days,” The Balance says. But some programs can take a bit longer (or go faster), so always talk to your lending officer and use their expertise to set your timeline accordingly.

The First Time Homebuyers Guide