Getting ready to buy your very first house?
If so, congratulations are obviously in order. Owning a home is one of the biggest steps that you can take in life.
But before you start popping open the champagne and celebrating, it’s important for you to get all your ducks in a row as far as the mortgage for your first home is concerned. There are certain mortgage tips you should put to good use when buying a home for the first time.
You’re going to have a tough time buying a new house if you don’t know how to get a mortgage from start to finish. It’s essential for you to take the right steps to getting a mortgage.
Here are 10 house buying tips for first-time home buyers.
1. Start by Taking a Look at Your Credit Score
When is the last time you checked out your credit score? If it’s been a while since you’ve done it and you’re not sure where it stands, now would be the perfect time to change that.
Your credit score is going to play a big part in whether or not lenders extend mortgage offers to you. It’s why it’s such a good idea for you to check your credit score and work to improve it, if necessary.
2. Think About How Much Money You Can Afford to Borrow
In addition to seeing what your credit score is, there are some other things you should do before you even consider reaching out to lenders about getting a mortgage. Thinking about how much money you can afford to borrow is one of them.
Sit down and look at where your monthly budget stands to see how much wiggle room you have in it for a mortgage. Your mortgage is obviously going to take up a good chunk of it, so you need to be careful about not overextending yourself when taking one out.
A mortgage lender might agree to give you $200,000. But if you find that you can only comfortably afford a mortgage for $150,000, that’s good to know.
3. Gather the Necessary Paperwork
When you’re trying to take out a mortgage, you’re going to need to provide a lender with lots of different paperwork. From pay stubs to credit card statements, there will be a million and one things that they’ll need before approving you for a loan.
It’s smart to start gathering the necessary paperwork ahead of schedule if you can. It’ll make the mortgage process go so much smoother than it would otherwise.
4. Seek Pre-Approval From a Mortgage Company Prior to House Shopping
Many first-time home buyers make the mistake of shopping around for homes before getting pre-approved for a mortgage. This is a silly mistake to make since it could result in you wasting a ton of time.
The last thing you want to do is fall in love with a house that’s way out of your price range. Instead, you should use the paperwork that you put together to get pre-approved for a home loan.
5. Decide How Big of a Downpayment You Can Make
Do you have a bunch of money saved up that you’re going to use for the downpayment for your first home? Or do you have next to nothing set aside for it?
Either way, you need to know how big of a downpayment that you’ll be able to make on a house. It’ll help you figure out a budget for your home and determine what interest rate a mortgage lender will give you in the end.
6. Consider Whether or Not You’ll Need Mortgage Insurance
If you’re not able to put down a 20% downpayment on your first house, you’re likely going to get stuck paying what is called mortgage insurance. This will be an extra fee tacked on top of your mortgage payment every month.
Ideally, you should try to put yourself into a position where you’re not paying mortgage insurance. But if you do have to do it, it’s nice to know about it going in.
7. Shop Around for the Lowest Possible Interest Rate
Earlier, we talked about how important it is to get pre-approved for a mortgage. But we should note that you do not have to work with the same lender that pre-approves you for a home loan when you go to actually apply for a mortgage.
You can choose the lender that you want to work with. You should look for a reputable name that’s going to set you up with a favorable interest rate on your loan.
8. Make Sure Your Interest Rate Is Fixed
There are some first-time home buyers who agree to take on an adjustable interest rate when buying a new house. This is almost always a bad idea since it could cause your mortgage payments to fluctuate and make it hard to predict what they’ll be.
It’s better to go with a fixed interest rate. It’ll keep your mortgage payments the same month after month.
9. Avoid Using Credit While Applying for a Mortgage
This is one of the most underrated mortgage tips on this list. It’s surprising to see how many people get turned down for mortgages simply because they apply for one and then rack up a bunch of debt while they wait for approval.
Whether you’re trying to get a mortgage for the first time or the tenth time, you should steer clear of using credit while applying for one. It’ll increase your chances of getting approved.
10. Prepare for a Few Unexpected Surprises Along the Way
There are going to be bumps that you encounter when working towards getting a mortgage. Understand that from the beginning and you’ll have a much less stressful experience overall.
When problems pop up, work to take care of them as quick as you can. It’ll allow you to enjoy the home buying process so much more.
Take These Mortgage Tips Out for a Test Drive Today
When you’re buying a home for the first time, you’re going to feel excited, nervous, happy, fearful, and anxious all at the same time. This is perfectly normal!
By using the mortgage tips found here, you can get your nerves under control and make better decisions. It won’t be long at all before you’re celebrating moving into your first house.
Read the rest of the articles on our blog for more tips on buying a house.