Before you buy your first home, it’s helpful to have some first-time homebuyer tips handy to help you navigate the process. Extra knowledge will go a long way to saving money and avoiding mistakes that could derail your home buying plans.
1. Make sure you’re ready for homeownership.
Most aspiring homeowners understand the financial investment it takes to own a home but might not consider the unexpected. For example:
Are you ready to take on home repairs? That rainy-day roof leak or summertime air-conditioning breakdown is your responsibility as a homeowner.
2. Assess Your Debt
Lenders want to know that you’ll be able to handle the debt you already have, in addition to your new mortgage payment. An important metric is your debt-to-income (DTI) ratio. It’s a good rule of thumb if your total monthly debt (including your mortgage payment) does not exceed 36% of your gross monthly income. Getting your existing debt under control is imperative before you can begin your mortgage application and your house-hunting process.
3. Check Your Credit Early
Your credit score has the most significant impact on the interest rate lenders offer. Check yours at least two to three months before you apply for a mortgage to see if there’s anything you can do to boost it to 740 or higher to get the lowest interest rates and easiest path to approval.
Three quick tips that may help:
- PAY YOUR BILLS ON TIME
- PAY YOUR CREDIT CARD BALANCES OFF
- DON’T OPEN NEW CREDIT ACCOUNTS
4. Research Where You Want to Live and Make a Home buying Wish List
Once you’re pre approved and have an idea of the type of home you’d prefer, it’s time to research your favorite neighborhoods.
5.Know Your First Time Home Buyer Mortgage Options
Picking the right mortgage option could distinguish between a quick pre approval or a frustrating mortgage denial.
Several government agencies offer loan programs that cater to borrowers with low credit scores, military borrowers, or low-income buyers looking for homes in rural parts of the country. Conventional loans are the most popular but come with the strictest qualifying requirements.
When you’ve done the groundwork above, you’ll be in a prime position to shop for your new home with confidence.
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