Buying a home for the first time is a huge undertaking. Many new home buyers are full of questions and have a real desire to make sure they are making cost-effective decisions.
But never fear – you don’t have tojust wonderif you’re making the best mortgage and home-buying decisions.
We’ve gathered advice from top experts in the finance industry to help guide you through the home buying process with confidence.
1. Know Your Credit Score
According to the Motley Fool,
“Your credit score can make a big difference in how much home you can afford and how much interest you’ll end up paying. For example, if you’re obtaining a $200,000 mortgage and have a FICO score of 750, you can expect to pay $138,324 in interest over the term of a 30-year mortgage as of this writing. On the other hand, with a score of 650, you can expect to pay almost $35,000 more.”
Knowledge is power. Before you even begin talking to a lender or looking at homes, make sure you evaluate your credit score.
It’s important to understand what your current score will mean for your future interest payments. This first tip will help you determine ifnowreally is the best time for you to buy a home.
2.Get Pre Approved For A Loan
While most home buyers get pre-qualified for a loan before they start attending open houses, not taking the time to getpre-approved,is a common mistake that the inexperienced make.
Dave Ramsey says,“Get pre-qualified for a loan and take the extra time to get a pre-approval letter before you start your home search. Pre Approval shows sellers that you’re a serious buyer, which is a great way for first-time homebuyers to get ahead in a competitive market.To get pre-approved, your lender will need to verify your financial information (proof of income, taxes, etc.) and submit your loan for preliminary underwriting.”
3.Investigate Assistance Programs And Government Loans
Some lenders and state housing finance agencies can help you with your down payment amount, and other miscellaneous costs.
There are also government loans in place, like the VA loan or USDA loan, that require lower credit scores, and smaller (if any) down payment.
Nerd Wallet says,
“Some lenders partner with state agencies to offer rate discounts, down payment assistance or educational resources to help first-time homebuyers purchase a home. These programs include affordable loan and grant options for public servants, veterans or those with student loans, and benefits can often be combined to make buying your first home as affordable as possible.Although state housing and finance agencies market these first-time homebuyer programs, the mortgages are handled by typical banks, credit unions, and non-bank lenders. Eligibility requirements vary by state, program, property location, and lender — and not all lenders participate, so be sure to ask.”
When considering a home purchase, it’s a good idea to look into these loan types and programs in advance to see if you qualify for any.
4.Talk To Multiple Lenders
Another common mistake that first time home buyers make, is only dealing with one lender from start to finish.
Bankrate advises,“Shop around with at least three different lenders, as well as a mortgage broker. Compare rates, lender fees, and loan terms. Don’t discount customer service and lender responsiveness; both play key roles in making the mortgage approval process run smoothly.”
If you don’t talk to multiple lenders, you will have no idea if you’re getting a good deal or not.
Take this extra step, and you could potentially save yourself thousands of dollars.
5. Factor In Utilities And Miscellaneous Expenses
When determining your budget, it’s a good idea to take a look at your dream home’s past utility bills and other costs.
When you calculate your mortgage payments, you will need a big picture of what you will actually be paying for your gas, electricity, garbage, sewer, water, home insurance, etc.
In addition to these utility costs, Bank of America says to,“Be sure to budget for moving expenses and additional maintenance costs. Newer homes tend to need less maintenance than older ones, but all homes require upkeep. If you’re considering a condo or a home with a homeowners association (HOA), remember to include HOA dues in your budget. Keep in mind that you should have an emergency fund on hand to prepare for any unexpected changes in your income (like reduction in your wages) or unexpected expenses (like medical bills).”
While daunting at times, the home buying process is an exciting time, and with these expert tips, you can feel confident that you are making the mortgage decisions that are right for you.
If you’d like to get pre-approved for your dream home, contact us at Golden Eagle Mortgage today!
Golden Eagle Mortgage Group
260 Tres Pinos Rd., Ste. B-2
Hollister, CA 95023