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Are you a first time home buyer looking to buy a home in Portland, OR? If so, you might feel a bit overwhelmed at the prospect of going through the process of finding a home, putting in an offer, and finalizing a mortgage to help finance the purchase.
The truth is, there’s a lot involved in buying a home, which is why buyers — especially first-timers — should team up with a seasoned real estate agent and mortgage specialist to help guide them throughout the process.
Before you embark on an adventure in finding your new home, it’s important as a first time home buyer in Portland to take a few steps beforehand to ensure you commit to something that you can comfortably afford. As such, consider the following helpful tips..
Give yourself plenty of time to save up money for your down payment. When you apply for a mortgage, you’ll need a big chunk of money in the form of a down payment that will go towards the purchase price of the home.
The amount you have to come up with will depend on the price of the home and the type of mortgage you’re applying for.
For instance, you might come up with 3.5% of the purchase price of a home (minimum for FHA loans), or as much as 20% for a conventional loan (which will also help you avoid private mortgage mortgage insurance premiums).
Regardless, you’re looking at tens of thousands of dollars that you’ll need. As you would imagine, that can take a while to save up, so the sooner you can start saving, the better. Plus, there are closing costs that you’ll need to pay upfront when your purchase finalizes, so be sure to have enough saved up for that too.
If you have no idea what your credit score is, request a copy of your credit report from one of the major credit bureaus in the US: Experian, Equifax, or TransUnion. If you think there are any errors on the report that may be pulling your score down, dispute them and have them rectified right away.
If you discover that your credit score is lower than it should be, take steps to improve it. Your credit score plays a key role in your ability to secure a mortgage, as well as the interest rate you can get.
Take some time to give your score a boost by making sure you pay all your bills on time, keep your credit card spending low, pay down your debts, and avoid taking out any other loans or credit products before your final mortgage is approved.
Find out about all the home loan programs available out there to decide which one suits you best. One of these programs includes the FHA loan, which first time home buyers in Portland like because of its less stringent credit score and down payment requirements
There are also options when it comes to the term length of the mortgage, such as 15-year versus 30-year mortgages. Longer-term mortgages mean lower monthly payments, but you’ll pay more interest overall. On the other hand, shorter-term mortgages mean less interest paid, but monthly mortgage payments will be much higher, which might make them more difficult to include in your budget.
You can also decide between fixed-rate versus adjustable-rate mortgages, which simply refer to the interest rate and whether or not it will remain fixed throughout the term of your mortgage or will fluctuate.
You may be able to take advantage of down payment assistance programs that are designed specifically for the first time home buyer in Portland. There are also some tax credits available through some programs. Be sure to speak with your mortgage broker to find out what you’re eligible for.
Before you choose a lender, be sure to do some comparison shopping in terms of the interest rates and fees that are charged. The idea is to get the lowest interest rate possible, which will have a significant impact on how much you end up paying over the life of your loan. But you should also pay attention to all the fees that are charged, which can drive up the cost of your mortgage.
Lenders are required by law to disclose all this info to you before you sign on the dotted line, so you’ll be able to find out exactly how much a mortgage will cost you before you agree to anything.
Before you start looking for a home to buy and put in an offer when you find one, get pre-approved for a mortgage first. A mortgage pre-approval will serve you well in multiple ways. For starters, it will tell you how much you will be able to get approved for, which ultimately tells you how much you can afford in a home purchase.
Pre-approval will also make you a more competitive homebuyer, especially in a hot market where there are many other buyers eyeing the same properties that you are. Sellers will look more favorably on home buyers who have a pre-approval letter in hand.
And finally, being pre-approved will help move the final mortgage approval process along faster, since much of the documentation that your lender needs will already be submitted. All that would be left is to submit your purchase agreement, as long as nothing else has changed in your financial life.
There are many real estate agents available who are good at what they do. But you also want to work with someone who is very familiar with the area you’re looking to buy in.
Real estate agents who specialize in specific communities will know those neighborhoods like the back of their hand. That means they’ll have their finger on the pulse on homes that are coming up on the market that may fit your criteria.
Further, local agents will be able to negotiate more effectively when they’re more familiar with the area they’re dealing in.
There are certain contingencies that you’ll want to make sure are included in your offer, especially the home inspection and financing contingencies.
The home inspection contingency will allow you some time to have a professional home inspector visit the property and inspect it in great detail. Their job is to identify any potential issues with the home if they exist, and communicate these issues with you.
If any are identified, you’ll have a few options: request the seller to make the necessary repairs, ask for a credit so you can make the repairs yourself, accept the issue as is, or walk away from the deal altogether.
As long as you are able to have this inspection done before the contingency’s expiry date, you should be able to back out of the deal if you find a major issue with the home that you’re not comfortable with, and won’t risk losing your earnest money deposit.
Your financing contingency works the same way. You’ll be given a certain amount of time to get final mortgage approval before you commit to the home purchase. If you’ve been pre-approved and nothing in your financial life has changed, there’s little reason for you not to get approved, unless the home appraisal comes in low.
Regardless, the financing contingency will ensure that you can get final approval before the deal closes. And if you can’t, you can back out of the deal without losing your deposit. Contingencies are meant to protect the buyer and seller from committing to a deal that they may regret, which is why every first time home buyer in Portland should consider adding at least a financing and home inspection contingency to their offers.
If you’re a first time home buyer in Portland, be sure to team up with a seasoned mortgage broker and real estate agent today to make your first venture in the world of real estate a successful one!
Are you curious about the mortgage process, thinking about buying a home, or do you have questions about an upcoming home inspection? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington, serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest and have been doing so since 1992. Contact us today with any questions you have about mortgages.
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