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First-Time Home Buyer Tips

Find answers to questions about first-time home buyer loans and the home buying process

As a first-time home buyer, there's no shortage of questions. There's really no other purchase like a home, so it's hard to prepare for this experience. Here are eight common questions and answers that may help guide you through this important investment.

1. How do I establish the credit I need to obtain a mortgage?

As a first-time home buyer, it can be difficult to prove credit worthiness, especially if you're also young and lacking a substantial credit history. The best thing you can do is pay your bills on time, whether it's rent, utilities, cell phone bills or a car payment. You should also pay down credit card debt. All of these tips can help improve your credit score and make you a more attractive borrower.

2. Where do I come up with the down payment?

The standard is to have 20% of the home's price ready for a down payment. If you're buying a $200,000 home, that means you need $40,000. That's a lot of cash, especially for a first-time home buyer who's not receiving money from the sale of a previous home. So, when you decide to buy a house, investigate this. Depending on whether it's a fixed rate mortgage, ARM or other type of home loan, you may not need the full 20%. If you do, set up a money market account or bank CD with a competitive interest rate, and start making automatic deposits. The sooner you start saving, the better.

3. What closing costs can I expect to pay?

When you apply for a mortgage, you'll pay closing costs at the end of the mortgage process, which can add up to a few thousand dollars. These may include the following, although they're not limited to this list:

  • First month's mortgage payment
  • Application fee
  • Fee for a credit check
  • Title search & insurance
  • Appraisal fee
  • Lender and attorney fees
  • Inspections
  • Documentation preparation
  • Property taxes
  • Homeowner's insurance

4. Are there special first-time home buyer programs?

While there are no official first-time home buyer loans at this time, Citizens Bank is equipped to help you navigate these new waters. When you contact one of our home loan originators, let them know this process is new to you. You can also get valuable first-time home buyer tips straight from one of our lending experts now.

5. How should I structure my house hunt?

A good first step for first-time home buyers is to call a local real estate agent who knows the market and can help you focus your search. There's no charge for using a real estate agent to help you find a home; he or she will receive a cut of the final sale price. Your agent can have potential homes automatically emailed to you every day. Create some 'must have' and 'would like to have' criteria to help you sort through all these homes. Once you have a list you'd consider, set up a day with your agent to tour them.

6. What's a reasonable initial offer?

Your real estate agent will be instrumental in helping you determine the offer amount that makes sense for your situation, as there is no right answer. It depends on the market, the seller, your willingness to negotiate, how long the home has been for sale, and more. If you're really serious about the home, you may not want to play hard ball in negotiations. On the other hand, circumstances may be right for you to make a low offer and potentially save yourself money.

7. How long will it take to close?

Typically, it can take 30 or 45 days to close on a property, although this may be negotiable. During this time, mortgage processors, appraisers, home inspectors and title agents are involved in reviewing your application and the home.

8. What kind of homeowner's insurance do I need?

You'll need homeowner's insurance lined up early in the process as proof of insurance is required during your mortgage application. There are several kinds of coverage, including liability coverage, basic protection against damage from extreme weather or disaster, and replacement coverage, which would reimburse you for the cost of rebuilding your home and replacing belongings in the event they were all lost. There are cheaper forms of insurance, which reimburse you the value of the items at the time of loss. The amount of coverage you want is up to you, but be sure you understand the minimum coverage your state requires.

Contact a Citizens Bank home loan originator

As a first-time home buyer, you probably have even more questions. Don't be shy about asking! You can reach out to a home loan originator at 1-888-514-2300 to ask questions and start your mortgage application.

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