Buying your very first home shouldnt be nerve-wracking. While it is true that the road to owning your dream home can be full of twists and turns and deep potholes, you can always navigate your way, avoid many of the common mistakes made by first-time home buyers, and save hard-earned money by following these home mortgage tips you really need to know.
Even if you mortgage the house you want to purchase, you will still be expected to put a down payment of the total cost. Most lenders require you to pay at least 20% as down, although it is not unusual that some may provide you with a much lower rate of up to 3%. Regardless, you will still need to put up that sum of money to acquire your home. So, start saving in earnest. Set aside your tax refunds as well as work bonuses. You can also set up a savings plan you can easily track with todays technology.
Explore Your Options
There are a number of mortgage options for you. You can choose conventional mortgages that typically require 3% down payment or even loans offered by the Federal Housing Administration. The latter usually require you to put up a 3.5% down. Veterans Affairs loans as well as USDA loans can provide eligible individuals with a no-down payment scheme.
Check Your Credit Score
Make sure you have an idea of your credit score. Depending on the mortgage option you will choose, this can have a significant impact on the likelihood of your mortgage being approved. Conventional mortgages expect you to have a credit score of at least 620. Loans offered by the FHA or other federal agencies may lower the credit score requirement, usually 500. Know that your credit score will have an impact on your mortgage interest rate. Generally speaking, individuals with higher credit scores are given lower interest rates. Make sure you have this covered.
Always Consider Mortgage Assistance Programs
First-time home buyers are strongly encouraged to look for mortgage assistance programs provided by their locality. Municipalities, counties, and even state-wide programs are available that can help you with the down payment or the closing costs. Some can also provide assistance in terms of discounted interest rates and tax credits.
Getting pre-approved for a loan is always an excellent idea. This will give you an idea of the likelihood that your loan application will be approved. Just make sure to get a pre-approval letter from your lender so youll have a much better chance of landing your dream home.
These are relatively easy tips that you can follow to get the home youve always dreamed of.