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First time home buyer

Buying your first home can be the biggest and most important purchase of your life, but it doesn’t have to be painful. Knowing the process and being prepared for each step can prevent many headaches -- and save you money. To help, we’ve gathered expert commentary, relevant data and even our personal home-buying experiences to guide you from the initial search to the closing table. Learn where to start, how to get pre-approved for a mortgage, how much home you can actually afford and how to get the best mortgage rates. And just so you’re sure, a first time home buyer is someone who has never owned a home, or someone who has not owned a home within the last three years.

6 steps to buying a home

  • 1. Building and improving your credit
  • 2. How much house can I afford?
  • 3. Getting preapproved
  • 4. Picking the right mortgage
  • 5. Preparing your documentation
  • 6. Closing your loan

Step 1: Building and improving your credit

Before you contact a Realtor or mortgage lender, you need to know if your credit is good enough to qualify for a mortgage. This is the time when you should pull your credit reports and take the necessary steps to ensure you have built up a sufficient credit history and that your score is as high as it can be. The higher your credit score, the lower the mortgage rate you'll receive. This is the appropriate time to correct any errors or inaccuracies on your credit report which may trip you up later.

For help on how to improve your credit, be sure to read:

Home buyer tools

This mortgage calculator will show how much your monthly mortgage payment would be, including your amortization schedule. See how much you could save by prepaying some of the principal. Find out your home loan...

Saving money for a down payment is a long slog. You probably know that making a large down payment can make your loan simpler to get and less costly to have. You might not know that the size of your down payment...

This mortgage calculator will show the Private Mortgage Insurance (PMI) payment that may be required in addition to the monthly PITI payment.

HSH.com's FeePay BestWay calculator lets you see the best way to pay mortgage closing costs, whether out of pocket, built into the loan amount or via a slightly higher interest rate.

Current mortgage rates

Time Range: 1m | 6m
Loan Current Previous
30 Year Fixed * 4.08 4.03
15 Year Fixed * 3.34 3.25
5/1-year ARM * 3.15 3.12
Source: Freddie Mac

Personal experiences

What better way to learn about the home buying process than to read about someone’s personal experience buying a home. Below are two features that were written by our senior managing editor regarding his home buying experience. We’d love for you to share your experience with us!

Click this link to contact us if you would like to share your home buying experience.

12 things I learned when buying my first home

My name is Tim Manni, I’m a 32-year-old first-time homebuyer. While my wife briefly owned a co-op prior to our home purchase, I was a career renter up until last month. Despite immersing myself each workday with the latest mortgage and real estate news and information, I quickly realized there was a lot I still had to learn about the home-buying process.

I am the definition of the millennial first-time homebuyer everyone in the industry seems so obsessed with these days. So, what better way to find out what the millennial-home-buying process is like than to hear it from the horse’s mouth?

Here are 12 things I learned when buying my first home…

13 things I hated about buying my home

For my wife and I, buying a home was one of the most rewarding accomplishments of our lives. While some days it feels like we’re barely treading water as homeowners, other days we’ve never been more happy and thankful. But getting to the closing table was a long, frustrating process. From getting our finances in order, to shopping for a home, to actually finding one that met our needs and budget, there were several aspects of the home-buying process that left a lot to be desired.

In fact, I can safely say there was a lot about the process I hated. While I’m happy now in my new home, here are 13 things I hated about buying it..

Mortgage options

Once you realize you want to buy a home, next comes one of the most important decisions you will make: what type of mortgage are you going to apply for. Will you take a 30-year loan or a 15-year loan? Will the mortgage be backed by Fannie Mae or Freddie Mac or the FHA? Is a VA loan right for you?

To help you decide, we developed a guide on common mortgage types.

Fixed-rate mortgages

Long-term fixed-rate mortgages are the staple of the American mortgage market. With a fixed rate and a fixed monthly payment, these loans provide the most stable and predictable cost of homeownership.

The most common term for a fixed-rate mortgage is 30 years, but shorter-terms of 20, 15 and even 10 years are also available. A shorter term means a higher monthly payment but much lower overall interest costs. Since a higher monthly payment limits the amount of mortgage a given income can support, most homebuyers decide to spread their monthly payments out over a 30-year term.

Adjustable-rate mortgages

Since monthly payments can both rise and fall, ARMs carry risks that fixed-rate loans do not. ARMs are useful for some borrowers -- even first time borrowers -- but do require some additional understanding and diligence on the part of the consumer. 

There are both Traditional ARMs and Hybrid ARMs.

Traditional ARMs have interest rates that adjust every year, every three years or every five years. You may hear these referred to as "1/1,” "3/3” or "5/5" ARMs. These refer to how frequently the rate changes and how long the new rate remains. For example, initial interest rate in a 5/5 ARM is fixed for the first five years. After that, the interest rate resets to a new rate every five years until the loan reaches the end of its 30-year term.

Almost a "best of both worlds" product, Hybrid ARMs offer initial fixed interest rate periods of three, five, seven or 10 years; after that, they most frequently turn into a 1-year ARM, where the interest rate will change every year thereafter.

FHA

FHA loans continue to be quite affordable in 2016, thanks to last year's reduction in the annual mortgage insurance premium that the Federal Housing Administration charges.

Add lower down payment and credit requirements to the mix, and the fact that these federally-insured loans are assumable, and FHA mortgages are an attractive option to many borrowers.

Read more about the advantages of FHA mortgages.

VA home loans

If you’re a servicemember, veteran or surviving spouse, you may be eligible for a VA mortgage. Zero money down and attractive rates and terms are just some of the advantages associated with VA mortgages. But as with any loan, there are drawbacks that also need to be considered.

Click here to learn more above VA home loans.

Mortgage options by age

Depending upon your age, there are different things to consider when choosing which mortgage is right for you, such as the size of the home, how long you plan to live there, do you plan on having children soon, what kind of mortgage do you want, and how much you have saved for a down payment.

HSH.com has developed content for those from their twenties through their forties to help you navigate everything involved with buying your first home:

Best mortgage options for millennials

How to buy a home in your 20’s

How to buy a home in your 30’s and 40’s

Home buyer assistance by state. Click here to find out what type of assistance is available in your local area