Buying your first home is a outstanding achievement. It is the end result of months of saving and getting your finances together. If this your first time buying a home, what should you know about the process of acquiring your first property?
What Kind Of Loan Are You Going To Get?
There are many types of loans available to first time homebuyers. For example, a FHA loan allows you to buy a home with a down payment of as little as 3.5 percent. Those who have served in the military may be eligible for loans that don’t require a down payment at all. However, when comparing home loans, you should understand that loans requiring a low down payment may require you to buy mortgage insurance. That could increase the overall cost of your loan. Also see What To Do If Your Home Loan Was Rejected
Use A Loan Calculator To Determine Your Monthly Payment
With so many variables that go into determining your monthly payment, you should look for the most accurate loan calculation possible. It is a good idea to find a calculator that allows you to see what your payment is if you have a fixed-rate loan as opposed to a variable loan. You should also see what your payment will be with a 20 percent down payment versus a 3.5 percent down payment. Property taxes and homeowners insurance will also have to be accounted to figure out what your monthly housing payment will be.
Pay Down As Much Debt As Possible
If you have credit card debt, make sure to pay that off before applying for a mortgage. This is because lenders want to see borrowers who have a low credit utilization percentage. Having a low utilization rate indicates that you don’t rely on credit to make payments. It also shows lenders that you are able to handle your money in a responsible manner.
Never Buy A House Without An Inspection First
You never want to purchase a house without getting an inspection done first. While this will cost several hundred dollars to do, you could risk spending even more if there is a problem that goes undetected because no inspection was ever completed. The inspection will look for issues with the roof, foundation and structure of the home.
If you are buying your first home, the process of finalizing the deal can seem treacherous. However, as long as you prepare ahead of time, there should be few issues with getting your mortgage application approved and a deal on your dream house done in days or weeks.