Purchasing a home is an exciting time in anyone’s life and this is especially true for first time home buyers. However, purchasing a home can add a lot of stress and therefore, it is important to be well-prepared in advance. We can help you to discover a few of the more important things that you should know before beginning your new home search.
Some of the things to consider are locating a good real estate agent, visiting open houses, making an offer, having an inspection or audit done on the house, figuring out how much of the down payment you require, calculating a monthly mortgage fee in accordance to your budget, and locating the best mortgage with the lowest interest rate.
The first thing that you will want to do is to get your financial life in order. If your credit rating is poor then you will need to strengthen it. The better FICO credit score that you have will mean the easier it is to obtain a good mortgage. A credit score can range anywhere from 300 to 850. Many new homeowners may not understand that a 0.005% interest difference can calculate into the tens of thousands over the entire term of the mortgage.
You can obtain a free credit report which will show you what lenders are on your credit history. Try to pay off all of your credit cards and if you have any delinquencies or credit disputes make sure that you resolve them. A general credit score is from 650 to 700. If you have a credit score higher than 700 it may provide you with a interest rate reduction.
For example, let’s suppose that you were trying to get a 30 year mortgage for $175,000. If your credit score is between 600 and 650 it may not qualify but if it did you would end up paying approximately $375,000 for that mortgage upon completion. If your credit score is between 650 and 700 then that same mortgage of $175,000 would cost you $300,000 in total. Between 700 and 750, $298,000. Between 750 and 850, $291,000. You can see that a higher credit score can save you thousands of dollars on a 30 year mortgage.
It is also advisable to get a pre-approved mortgage before you start searching for a house. A seller will prefer someone who has a pre-approved mortgage rather than wait for another offer that requires mortgage approval. When you shop for your mortgage do so by visiting various mortgage lending institutions. Once again, you can do this before you decide upon a house.
Many people fall in love with homes that they cannot afford but when you shop for your mortgage in advance, your lending institution will provide you with a maximum amount of money that you can spend. Try to predetermine the total amount of your down payment. Finally, there may be first-time buyer programs available from your state or federal government that can save you additional funds or help with your down payment. Otherwise, enjoy your new home.