Buying a home for the first-time can be one of the most fun and meaningful experiences in your life. But finding your dream home is just one step in the process. Applying and acquiring for a mortgage is another key step toward homeownership. The following first-time home buyer mortgage tips should help you prepare for the process.
Here’s one of our more obvious mortgage tips: A sizable down payment can help you in multiple ways. Most importantly, it might help you qualify for a lower mortgage interest rate. A substantial down payment can also help you reduce your monthly payments. Therefore, it is a good idea for first-time home buyers to put down as much as 20 percent as a down payment.
First-time home buyers might be able to avoid paying for private mortgage insurance (PMI) if they can put down a 20 percent or larger down payment. Play around with a free mortgage calculator and see the impact of a 20 percent down payment.
Some mortgage tips for saving for a down payment include: living below your means, transferring tax refunds into a savings account, setting aside work bonuses, creating and staying within a monthly spending budget, and setting up an automatic savings plan.
Let’s face it: Your credit history is one of the most important factors during the mortgage application process. Your credit score has an impact on your loan options. If you want lenders to compete for your business, you need good credit. The first step is to check your credit — even if you think that you have outstanding credit. To avoid surprises, check your credit for free at Annual Credit Report.com.
If you find any inaccuracies on your credit report, you can submit a dispute or request changes with the credit bureaus.
Shopping for your dream home without a mortgage pre-qualification is like walking into a mall without your wallet. Yet, many first-time home buyers fail to get a pre-qualification. It’s the initial step in the mortgage process, and it’s fairly easy. This will enable you to have an idea of the size of mortgage that you will qualify for. This one of our favorite mortgage tips for first-time home buyers.
A great mortgage tip to help you prepare for both the pre-qualification and mortgage application process is to organize your documents in advance.
Lenders might ask you for any of the following (and more) documents:
Your mortgage payment is one of your most important bills. With every monthly payment, you are one step closer to owning your home, free and clear. An additional benefit is that on-time payments might improve your credit score. One of our best mortgage tips for first-time home buyers is to set up automatic mortgage payments with your bank. If you are unable to set up automatic mortgage payments, you might want to set up automatic payment reminders. If for some reason you are unable to make a payment, contact your lender immediately.
The home buying process includes a lot of moving parts. As a first-time home buyer, you can take steps to improve your chances to qualify for a mortgage. Following the mortgage tips in this article should help you decrease stress and enhance your home buying experience.
Anytime someone buys a new home, it’s something worth celebrating. Your friends..