Purchasing your first home is an exciting and scary time. For the most
part, new homebuyers are unfamiliar with the home buying process.
Before accepting a mortgage loan, it is important to educate yourself on
various loan programs. Furthermore, first time home buyers should be aware
of factors that improve and decrease their chances of getting a good
loan package.
How Much Can You Afford to Spend?
The biggest mistake that some homebuyers make is purchasing a home they
cannot afford. Many assume that since their mortgage application was
approved, they can meet the expenses of homeownership. On the contrary,
some lenders regularly approve questionable loans.
Obtaining a pricier home may sound appealing; however, the risk of
foreclosure is higher. Aside from affording your monthly mortgage payment,
you must have the funds for utilities and unexpected expenses that
arise.
Get Pre-Qualified for a Home Loan
Getting pre-qualified for a mortgage before beginning your search will
speed up the home buying process. A pre-qualification provides an idea
of an affordable mortgage amount. Thus, you avoid touring homes and
neighborhoods outside your budget. A pre-qualification letter from a
lender does not guarantee a loan. The loan amount is contingent on income,
employment, and credit verification.
Fix Your Credit before Applying
Although it is very possible to get approved for a first time home loan
with poor credit, a good credit rating will open the doors for low
rates and better financing options. Improving your credit is a slow
process. To begin, strive to pay all creditors on time and avoid skipping
payments. A key to increasing credit scores is maintaining a good credit
standing. Secondly, reduce your debts. Maintain credit cards at half the
maximum limit. If possible, payoff balances monthly.
Select a Good First Time Homebuyer Loan Package
Working with a mortgage broker is the best way to locate excellent
first time home buying loans. Many first time homebuyers do not have extra
cash for closing or down payments. A mortgage broker has access to
several lenders that are willing to offer assistance for down payments and
closing fees. Furthermore, if you have bad credit, a broker can match
you with a bad credit or sub prime mortgage lender. The advantage of
working with brokers is that you receive multiple offers. After receiving
the loan application, your broker will send you up to four offers from
prospective lenders
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