First Time Home Buyer Guide
Get excited, your home-buying journey starts here!
Buying your first home is an exciting time for sure! We’re bringing you a few simple tips and need-to-know facts to make your first-time home buying experience a breeze. Remember, we’re the premier home buying professionals in New Smyrna Beach and we’ve helped thousands of other first-time home buyers just like you purchase their first homes.
You can count on our team to walk you through every step of your real estate transaction to your complete satisfaction!
Understanding Your Mortgage
Securing a mortgage is a major piece of the home buying puzzle, and a step that often overwhelms first-time buyers. Check out the facts below to understand which type of mortgage is right for you and how to go about applying for it.
Types of Mortgages
There are four basic types of mortgages used by the majority of home buyers.
This is the standard mortgage that most buyers with good to excellent credit will use to buy their home alongside a down payment of at least 10%. While this is a good choice for many buyers, there are several programs offering options for lower down payments based on buyer credit and location.
These mortgages are generally good options for buyers with lower credit scores, as they offer a down payment as low as 3.5% and lower interest rates. However, an FHA mortgage requires buyers to pay mortgage insurance premiums, which raises the overall cost of the purchase.
If you’re an active member of the military or a military veteran, you qualify for a VA loan. These mortgages offer up to 100% financinf, a simpler loan approval process, and relatively low interest rates. For those who qualify, they can be a much more affordable option than a conventional mortgage.
USDA mortgages are available to those who are looking to purchase a home in a rural or low-density area. They can offer up to 100% financing and below-average interest rates. Their ideal buyers are of average means, have lower credit scores, and are buying modest homes. Additionally, because of the government's loose definition of the term "rural," some of the buyers in the smaller communities surrounding New Smyrna Beach will qualify for this loan.
What Do Mortgages Include?
There are four main components to a mortgage payment, often abbreviated as "PITI."
This is the repayment of the initial amount you borrowed from your lender for the actual cost of your home
Added on to the initial price of your home, this is the payment you make to the lender for the service of borrowing money.
Your annual city and county taxes assessed on your property are divided by the number of mortgage payments you make in a year and added to your mortgage.
Your monthly homeowner's insurance payment covers you against various hazards and is added to your mortgage payment.
Going Loan Shopping and Understanding Your Options
Buying a home is a major financial decision, so it’s important to do your research first. Meet with a few different lenders to find the right mortgage with the best rates. And take some time to understand the different types of interest rates you’ll see when exploring mortgage options.
The interest on an FRM will not change, so your monthly payments won't change, making them very predictable.
The interest rate on an ARM will often be lower initially, but as interest rates do fluctuate with the market, they can be somewhat unpredictable or even result in higher payments.
Calculating Your Monthly Budget
Now that you know what loan options are available to you, what you can expect to pay as a down payment, and what your likely interest rates will be, it's time to determine how much you can afford to pay every month, which will then be used to calculate the price range of your home.
Keep in mind that your mortgage costs will be based both on the price of the home and the CURRENT interest rates. A home's affordability can vary from one day to the next based on the current rates.
Finding a Real Estate Agent in New Smyrna Beach
You don't have to work with an agent to buy your first home, but working with an experienced agent will remove the stress from the process and prevent you from making costly mistakes throughout the process. An ideal agent for first-time buyers will be trustworthy, have significant industry experience, and be familiar with the cities and neighborhoods that interest you.
Shopping Homes for Sale in New Smyrna Beach
Now that you know your mortgage options and have a trusted agent on your side, the real fun can begin! It’s time to decide what you’re looking for in a home, the type of amenities you need, and discover the perfect neighborhood.
Keep detailed notes about all the homes you research. It’s good to make note of what you liked and disliked about each individual property and to take your own pictures when you visit in person.
Making an Offer
You found the perfect house, and now it's time for your and your agent to sit down and discuss your offer. It's important to work together to determine a price you can comfortably afford but will also be a realistic offer for the seller to accept and will not be dismissed against any competing offers the seller might receive.
What Will I Pay Upfront?
Earnest money is essentially your security deposit. You make this payment when you submit your offer to show the seller that you’re serious about buying the property. It’s later applied to your down payment or closing costs when your offer is accepted and is returned to you if your offer is rejected.
The amount you put down towards your new home is determined by your loan, assistance programs, and government programs you’ve been approved for.
Closing costs are mostly there to cover the costs of paperwork and lender charges and are typically low for home buyers.
Requesting a home inspection
Once the seller accepts your offer, you’ll need to schedule a home inspection. This is where an experienced inspector examines the home to ensure that there aren’t any hidden issues that weren’t visible to your eye when you toured the property. It’s especially important for structural issues, electric, plumbing, and to find mold. If necessary, you can request that the seller repair any issues you find.
You’re getting close now! Closing is where you sign the paperwork, make any necessary negotiations, and get the keys to your new home!
The Final Steps
Review your contract
Don’t sign the paperwork until you’ve had the chance to carefully read over the entire contract with your real estate agent. Here, you’ll make sure there aren’t any contingencies or other surprises.
Finalize your mortgage
Next, you’ll submit your mortgage application to the lender of your choice. They’ll appraise the home and you’ll be informed about the predicted closing costs—including your title fees, home inspection fees, taxes, government recording, and more.
Sign, pay & get keys!
It's time to close! Meet with your agent, lender, and the seller to finalize the paperwork, sign your contracts, and pay your down payment and closing costs. Finally - the keys to your new home!
Still Have Questions About Buying Your First Home in New Smyrna Beach?
Of course you do! There’s a lot to learn on this exciting journey! So don't wait - contact us today and ask away! Want to do some more reading? We have plenty of resources to help you out.
New Smyrna Beach Home Buying Resources