Tips for first-time home buyers make process smoother

Posted by Tom Kalinski Founder RE/MAX of Boulder on Monday, May 12th, 2014 at 2:00pm.

A market with a tight supply of homes for sale and even tighter credit is not the most attractive or easiest for first-time home buyers.

According to Money Magazine, student debt is at an all-time high of nearly $30,000 per graduate, making efforts to save up for a down payment difficult, says David Stevens, president and chief executive officer of the Mortgage Bankers Association.

However, the time is still right to buy real estate.

“Interest rates remain the envy of even your grandparents," says Keith Gumbinger, vice president of mortgage publisher

Here’s a checklist from Money for potential first-time home buyers to get on the straight-and-narrow road of home ownership:

One year in advance

  • Ensure the time is right. Use’s rent or buy calculator to see if, based on loan rates, taxes, and where rents and prices are headed in the buyer’s area, it’s the right time for buying. It's 38 percent cheaper buying versus renting nationwide.

  • Clean up the finances. Focus on saving money and paying down debt over the next year. Home buyers need at least 3.5 percent down for an FHA loan or 10 percent to 20 percent for a conventional mortgage. Lenders also look for job stability, so stick with it.

  • Discover personal home likes/dislikes. Pin photos or home listings to Pinterest or try the Swipe app from the site Doorsteps, which lets visitors browse listing photos and mark them pass or save. This will help home buyers choose the right house when the time comes.

Six months out

  • Make an impression. To boost a credit score, order free credit reports at and correct any mistakes. Pay bills on time, chip away at credit card balances, avoid new debt and don’t close any accounts or apply for new credit. The average credit score for approved mortgage applicants is 755.

  • Calculate what is affordable. Home shoppers can use an online calculator like the one at to estimate how much house they can afford based on their income, savings and debts. Knowing their budget will help narrow down how much home they can buy.

  • Forecast future expenses. With a better idea of how much house they can buy, first-time home buyers can do a more detailed budget. They can scan listings for property taxes on homes they like and get a home owners insurance quote at They should also call local utility companies for the typical bills and add 1 percent of the home’s value for yearly maintenance.

Three months before

  • Pick a loan. Fixed mortgage rates, now around 4.4 percent, may edge up to 5 percent in 2014, forecasts. If buyers are confident that their first home is just a starter home, they can save with a 7/1 adjustable-rate loan, now 3.5 percent. The risk: if they stay longer than seven years and rates rise sharply, they might find their mortgage less than affordable. Most mortgage borrowers opt for fixed-rate loans.

  • Get serious. Based on income and credit, a bank will pre-approve mortgages. “It's the No. 1 thing you want in your back pocket when you go shopping," says Svenja Gudell, an economist with Zillow. And to make themselves even more attractive in this hot market, buyers can pay a few hundred to go through underwriting upfront.

  • Find a Realtor. Home buyers should look for a real estate agent who has worked in the neighborhood in which they hope to live. And in a tight market like today's, they should ask candidates what their strategies are for unearthing listings and handling potential bidding wars.

Tom Kalinski 
Owner and Founder
RE/MAX of Boulder

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