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<March 2015>



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10 Tips For First-Time Home Buyers

By Laura Ferraro, Senior Vice President

Being a first-time homebuyer can easily become overwhelming. There are many things to consider and the search for finding your new home can be more comfortable when you know the steps to take.

At Lakeland Bank, we find a lot of first-time homebuyers have similar questions about the process, so we put together a list of tips for these buyers to consider.

If you have any additional questions, don’t hesitate to reach out to one of our mortgage loan originators. You can find one in your neighborhood by visiting our interactive mortgage map.
  1. Find out how much home and mortgage you can afford. To find out how much home you can afford, you will need to put a budget together including your monthly income, monthly expenses, and savings for a down payment. Using Lakeland Bank’s Financial Calculators, you can get a rough estimate of how much home you can afford and how much mortgage you may qualify for. Also, budget for your closing costs, which include origination fees charged by the lender, title and settlement fees, taxes and prepaid items like homeowners insurance or homeowners' association fees.

  2. Consider your monthly costs going forward. After you’ve determined how much mortgage you can afford, make sure your budget can handle the expenses of homeownership. You will be paying the mortgage, property taxes, homeowners insurance and regular maintenance costs such as utilities.

  3. Know your credit score and work to improve it. Get your free annual credit report at annualcreditreport.com and review it for unresolved issues and errors. Work to improve your credit-worthiness in preparation for buying your new home. Your credit score may impact your loan terms.

  4. Get pre-qualified for a mortgage so you are ready to bid on a home you love. When you get pre-qualified for a mortgage, you are negotiating from a position of strength having proven you are a credible buyer to the seller. It can help you stand out in a competitive market. Many deals fall through when an offer is made without pre-qualification forcing the seller to start the process all over again. To get pre-qualified, visit with your lender to get a written statement with the lender’s preliminary determination that you qualify for a particular loan amount. Most pre-qualified letters are good for 60-90 days.

  5. Tax credits or tax breaks. If you need new appliances, buy energy star certified ones for potential tax credits. And speak with a tax professional to take advantage of all the tax credits and breaks available to you.

  6. If you’re receiving a gift from your parents or family, check the tax laws. If your parents or family are gifting you money to help pay for your new home there may be tax ramifications.

  7. Find out what you need to know about home inspections. The home inspector will evaluate the condition of the structure of the home and the mechanical systems to determine if anything needs to be repaired or replaced. It is recommended you be present at the home inspection so you can ask any questions or address concerns you may have.

  8. What is title insurance? Title insurance protects the buyer and lender from outstanding claims, liens or other title defects against the property that may have gone undetected after the title agent searched public records.

  9. Consider ways to cut insurance costs. Security upgrades may help cut insurance costs, as well as weatherproofing the home with storm shutters. It may also benefit your bottom line if you insure your home, car, and other goods with the same insurance company.

  10. Find a good real estate agent. You’ll want to find a licensed Realtor with the proper credentials. You can look up a Realtor’s license by using the State of New Jersey’s Department of Banking and Insurance Real Estate License Search. You can also look at their current listings, contact previous clients, and ask how long they’ve been in business to get a clear picture of their expertise.

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