If you’re starting to look for your first house to buy, you need to know that there are many things to bear in mind at all times. It’s not only about what you’re searching for; of course, it’s important to know your needs and have clear expectations, but there are many things to remember, especially if you’re getting your first mortgage too. This probably is one of the most important financial transactions in your life – if it isn’t the most important one – so make sure that you do it right and save as much money as you can.
- Know your credit score and mortgage options
Your current credit score is actually the most important factor when it comes to how much home you can afford and how high the interest rate will be – or if you get a mortgage at all. You can find calculators on the internet that are able to give you all the details when you provide them with all the necessary information. There may still be time to improve your situation or find something adjusted to your situation and needs. Then, compare mortgage rates and fees from at least three different lenders – the more the better.
Generally, you will need a minimum of 620 FICO score to qualify for a standard mortgage, but there’s also something like FHA mortgage prepared specially for buyers with a lower credit score. It’s normally more expensive, but for some people, it may be the only option. Point Me To are a well known mortgage broker in Shirley, they are happy to take the stress off your shoulders and negotiate with the estate agents for you
- Get a mortgage pre-approval before shopping
You don’t need anything to start watching the market and even seeing brokers and houses, but with a mortgage pre-approval, you will be seen as a serious buyer. The potential seller may treat you differently if you submit your pre-approval along with an offer when you encounter the house that you actually like. What’s more, real estate experts from https://www.thepattisallgroup.com/ urge you not to make any major purchases after being pre-approved. Increasing your debt-to-income ratio can lead to inquiries on your credit report and do some damage to your credit score which can hurt your interest rate. Lenders usually pull your credit score at least twice, and the second one is right before closing. If there are any significant changes, you can even be disqualified for the mortgage. If there’s something that you need quickly, it’s best to consult with your loan officer first.
- Don’t go for the maximum
Only because you qualify for a certain amount, it doesn’t mean that you have to take it all – remember that you will need to pay it off. A mortgage has to fit into the bank’s standard, but it also needs to be approved accordingly to your budget. Make sure you know how much you actually need and can afford to avoid being stuck with an enormous debt.
- Shop around for loans
Remember that there are many different lenders on the markets, not only the big national ones that everyone knows about; very often, even the smaller lenders are worth checking, because they may offer something that will be perfect for your needs. They have their own lending programs and can be more considerate for first-time buyers. For example, many states or even cities offer special help with financing big purchases, especially for young buyers. There are thousands of them and each has something different to offer so it’s good to do thorough research.
- Consider your down payment
The standard down payment is 20%, but many lenders permit much less these days, sometimes as little as 3% down. However, if your down payment really is less than 20%, it may mean higher costs of monthly mortgage payments and paying the mortgage insurance. So before you decide on anything, calculate how much you can really afford and maybe if it’s worth to wait for a little bit until you save some more money. Also, consider the time – if you want the smallest mortgage payments, you can get a 30-year fixed mortgage, but if you can afford larger payments, there may be a lower interest for you with a 20-year or 15-year fixed loan.
The real estate market doesn’t have to ruin you; in fact, it can even make you rich if you know your ways around it. So make sure that you’re equipped with all possible tools and information to find the house of your dreams and actually make a purchase. Don’t be afraid to ask questions and always consult with people who know more about the topic than you.