Buying a house for the first time
Buying your first home can be a rewarding experience. But it’s a big commitment—one that you should only make if the financial, emotional and lifestyle considerations make sense for you.
First-time buyers share lessons to help you through the process.
Use these tips on how to prepare for the mortgage application process.
Here are some financial terms that you should know when buying a home.
How much home can you afford?
Take the first step and get prequalified.
Before you start looking for your first home, ask yourself:
Are you comfortable with what you can afford?
If you can’t afford to buy in a certain neighborhood or if you’ll face a significantly longer commute, it may make more sense to wait to purchase a home. Use our affordability calculator to determine how much you can comfortably afford.
Do you have cash saved for the down payment and closing costs?
You will need money for your down payment and may be responsible for closing costs on the loan. You’ll also face new costs in addition to your mortgage payment. If you have limited savings, it may make more sense to continue a lower cost living arrangement until you can save more.
How financially stable are you?
If there’s a chance you could be laid off soon, or if your job requires you to move to a different city in the near future, buying may not be the best choice for you right now.
Do you have good credit?
If you have recently missed payments or maxed out your credit cards, you may consider waiting to purchase a home until your credit improves so you can qualify for a lower interest rate. Learn more about credit scores and how you can improve yours.
Here are some tips to help first-time homebuyers:
Take the advice.
Your real estate agent is your partner and a valuable asset. They know the neighborhoods and schools and will help negotiate a fair price for the house you want. Your Home Lending Advisor can answer questions about how much you can comfortably afford and provide guidance at every step. Get opinions from those you trust, such as your family and friends.
Understand your costs.
In addition to your monthly mortgage payment, you also pay interest, taxes, private mortgage insurance (if your down payment is less than 20% on a conventional loan) and several one-time fees at closing. These closing costs typically range from 2–6% of the total amount of the mortgage loan. Make sure you know the total cost.
Know your score.
A good credit score increases your chances of being approved for a mortgage and may lower your interest rate. If your score is low, try to improve it by making your payments on time, paying the monthly minimum (or more) and keeping your existing credit card accounts with zero balances open.
Estimate how much you can borrow.
You can get an estimate of how much you’ll be able to borrow by being prequalified for a mortgage. You will need to provide some basic financial information and a lender determines how much you may borrow. Prequalification is simple and usually can be done in one conversation. You may choose to start a prequalification online or speak with your local Chase Home Lending Advisor.
You’ll need to provide various documents, such as pay stubs, bank statements and tax forms. Make sure you know what papers you need and have them readily accessible. A Home Lending Advisor can help you determine what documents are needed.