First Time Home Buyer's Guide

by Sharon Piccioni, Horizon Farm Credit Loan Officer

Ready to establish your own roots, but don’t know where to start? We know that the home buying process can be overwhelming, so we’ve put together this helpful guide to help you prepare to buy a home and set the stage for what the process looks like when you work with Farm Credit.

How to Prepare to Buy a Home

You have heard this your whole life, but it really is one of the most important things: start saving as soon and as much as you can! When you have a good amount of money saved, it presents more options for you and will allow you to have enough for the down payment and closing costs. 

Another number to be conscious of is your credit score. You can build credit in a variety of ways, one of which is to open a credit card with a low spending limit and a low amount of permitted hard credit pulls. By paying it off every month, you will steadily increase your credit score. 

When looking into loan products, research various banks and lenders and call around to see what they offer. First time home buyers can often take advantage of specialized loans, so it’s best to familiarize yourself with these options. 

Another piece of advice as you embark on your home buying journey - decide what type of property you are looking to purchase. Whether you are looking for a large acreage property with a small house, a smaller lot with a bigger house, or looking for a lot to build on in the future, the loan options for each situation can be a bit different so it is helpful to have an idea on the property you are looking for when looking at options. 

The Process of Home Buying

We know this can be a daunting idea, but let us break the home buying process down into a few key steps:

Step 1 

Get prequalified! There is nothing worse than finding the home of your dreams and then learning that it won’t fit your budget. Knowing how much you can afford from the beginning will help you focus on the right properties and make the process a lot easier. Most lenders will do this step for free for you to get started. 

Step 2 

Connect with a lender you trust to learn about the options that fit your scenario. There are a ton of loan products such as SMM (secondary mortgage market), in-house fixed rates, adjustable rates, and all of them have pros and cons. It is essential to work with your lender to make sure you select the product that best suits you.

Step 3

Explore the housing options available. There are real estate platforms such as Redfin or Zillow to search for homes or land in your ideal location, or you can work with a local realtor to find a property for you. Sometimes the best opportunities are ones not yet on the market, so consider trying to find properties through word of mouth by talking to neighbors, friends, or family members.

Step 4

Once you’ve narrowed in on the property you would like to move forward with, reach out to your lender to start the loan process. You will want to prepare for the closing and other costs that come with buying a property. Many of these fees will not vary much from lender to lender such as transfer tax, title insurance, and recording fees, however, loan origination fees can be quite different. We recommend discussing these at the beginning of the process, as well as the other fees to consider, like Private Mortgage Insurance, which is needed if you do not have 20% down payment. 

Additionally, there are real estate taxes and homeowners’ insurance, which you will need to know if they will be included in your loan or a separate expense out of pocket. One last thing to remember is your appraisal which is often required when purchasing real estate. This fee can vary depending on the type of appraisal and who will be completing it.

Working with Farm Credit

We know there are plenty of options when searching for a lender to help you purchase your first home, but Farm Credit offers a number of loan products designed to fit your needs. From prequalification to closing, we strive to make your home buying experience as stress free as possible. 

Farm Credit also offers the ability to complete a note modification when interest rates fluctuate. A note modification costs much less than a full refinance, reduces your interest rate, and is done for a flat rate, via email from the comfort of your home. A member of our lending team can give you all of the details on note modifications when discussing our loan options.

We know that this is a transformative time of your life and while it is exciting, you want to be prepared for any road bumps through the process. Contact us today to get connected with your local lending expert and get started on your home buying dream!