Purchasing your first home is a huge commitment, and being financially prepared can save you a considerable amount of stress and additional costs. From paying off outstanding debts to getting pre-approved for a loan, here are a few ways to find your financial footing.

4 Tips for First-Time Home Buyers

1. Review Your Savings

Experts state that allotting 20% of your desired home’s value for a down payment increases your likelihood of getting approved for a mortgage with better interest rates and terms. You’ll also need between 2–7% of the property’s market rate for closing costs. Have a cushion for maintenance, emergencies, and three to six months of living expenses before starting your search.

2. Pay Off Debts

Less debt means better opportunities for acquiring your first home. Qualifying for a mortgage requires a credit score of at least 620 or above. 

There are a few ways you can boost yours. First, consult with your credit card issuer about waiving late payment fees, lowering your interest rate, or increasing your credit limit. Also, focus on debts that are close to their limit, and avoid maxing out your account.

3. Get Pre-Approved for a Loan

Before you start house hunting, take the time to get a pre-approval letter. This document shows sellers that you’re serious about purchasing a home and have the financial means to do so.

A lender evaluates your financial history, including your credit score, proof of income, and taxes. They then determine a loan amount and mortgage within your price limit.

4. Shop With a Firm Budget

Work with a real estate agent to find homes within your price range on the market. Once you settle on a property that meets your needs and criteria, put in a competitive offer that fits within your budget. Also, have your loan pre-approval on hand to help you stand out among other bidders.

With hundreds of millions of dollars in assets and over 60,000 members across Hawaii, Hawaiian Financial Federal Credit Union is one of the leading financial institutions in the state, with a reputation for combining personalized service with technologically advanced personal banking solutions. Learn more about our broad array of services online, follow us on Facebook, Twitter, and Instagram for news and updates, or call (808) 832-8700 on Oahu or toll-free at (800) 272-5255 with any questions.