What Every First-Time Homebuyer Should Know

Becoming a first-time homebuyer is exciting, but it’s a journey that you need to prepare for carefully so that it helps your financial life and doesn’t hurt it. Getting to the closing table involves many steps you should consider before you leap into homeownership.

This episode will cover 10 things every first-time homebuyer should know. You’ll learn how to prepare your finances, find the right mortgage, work with real estate pros, and even when to step back and wait to buy a home.

Here’s what you need to know to pave a smooth road to your new home. 

Tip #1: Credit is a critical factor for paying less

The first step in your journey toward homeownership should be checking your credit reports and correcting any errors. Mortgage lenders review your credit reports and one or more of your credit scores to evaluate you.

Good credit scores indicate that you’re more likely to repay a loan on time than if you have poor scores. They can make the difference between being approved or denied for a mortgage and the terms you get.

High credit scores allow you to get approved for a loan with a competitive interest rate, which can save you thousands or even tens of thousands of dollars over the life of your loan. 

High credit scores allow you to get approved for a loan with a competitive interest rate, which can save you thousands or even tens of thousands of dollars over the life of your loan.

Let’s say you have excellent credit, with a FICO score of 760 or higher. If you get a 30-year, fixed-rate mortgage of $250,000 with a 2.5% APR, you’ll pay just over $100,000 in interest over the life of the loan.

If you get the same loan but have a credit score of 659, you could end up paying close to $160,000 total. That means you spend $60,000 more on interest over the life of the loan. 

To get the best mortgage rate possible, check your credit reports from the three national credit bureaus: Equifax, Experian and TransUnion. You can get them at each of the bureaus’ websites or access all three at the official credit site, AnnualCreditReport.com. 

Once you receive your reports, look for errors, such as incorrect account balances, payment dates, or personal information. If you find any problems, dispute credit report errors on the credit bureau’s website. If there are incorrect account payments or balances, contact the creditor in writing to ask for a correction.

Since credit disputes can...

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