Are you thinking about buying your first home? Owning a home can be a huge milestone but it can be scary at the same time! As a first time homebuyer, going through the mortgage process can be overwhelming but with the right knowledge you can set yourself up for success. Working with a realtor and loan officer that understands first time homebuyers, we can help guide you through the process of buying a home. Here are some tips to help you through the process:
Check your credit score. Your credit score is one of the most important pieces to your mortgage. A higher score can mean a better interest rate and can help with different loan programs. Before you start the mortgage process, check your credit report for errors. If you tend to use credit cards, try to lower the amount on the cards so they are under 30% of the credit limit. Ideally it helps to pay off the cards so you aren’t paying interest, but keeping them under 30% of the limit will help your credit score. Make sure your payments are on time.
Get a mortgage approval before you start looking at homes. This will give you a clear idea of your budget so you know what to look for. There is nothing worse than finding a home you love and then you can’t qualify for the home. Plus you will need the mortgage approval in order to purchase a home.
Understand your budget and what you can afford. Just because a lender approves you for a certain amount, doesn’t mean you want to spend that. Think about your monthly payments, expenses that you have that a lender may not consider. You may have hobbies that take some of your time and money, you don’t want to be house poor when you purchase your home. I always ask what you are comfortable with in a house payment – think about that.
Compare different mortgage options. There are different mortgages that may help you. Do you need down payment assistance? How long are you going to be in the home? Does it make sense to consider an adjustable rate or is a fixed rate better for you? Adjustable rates may have a lower starting rate but will increase over time. Most first time homebuyers will choose a fixed rate mortgage so they know the mortgage payment won’t change, the taxes and insurance will change, but not the principal and interest.
Save for your down payment and closing costs. Saving for a down payment can be one of the hardest parts of buying a home! Remember that you do not need 20% down, you can usually buy a home with as little as 3% down. If you have VA loan benefits, you can buy with zero down. There may be down payment assistance programs that can help you with the down payment. Sometimes you can ask the seller to contribute towards your closing costs and that can help you with the down payment.
Buying your first home can be exciting, but make sure you follow your plan! Do not overspend, remember you are the one that has to make the mortgage payment so stick to your budget! Follow these tips and work with the right realtor and loan officer and you can make buying a home a fun journey!
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
