When you begin the journey to buy your first home, there are many things to consider. Here are a few tips to help make the process just a bit easier.
Credit
Your credit score plays a large part when it comes to securing home loans. A mortgage is seen as a large risk on the part of the bank, and as such they are cautious when it comes to their lending. To qualify for a mortgage it’s essential to keep your credit score in good shape, preferably 600 or more.
Budget
Lenders don’t want you to borrow more than your budget will allow, as that puts them at risk of losing money should you fall behind on payments. They will look at your average income against the amount of monthly mortgage payments. If they find the amount to be too great for you to manage, the loan can be denied. Online mortgage calculators can help you do this math yourself, so that you can better prepare before heading into the bank.
First Time
Some banks will offer special mortgages to first time home buyers. Sometimes these can be a valuable asset to new buyers. It’s a good idea to familiarize yourself with these types of loans, along with particular restrictions that they may have. Always speak with a lender at length about your options before you sign anything.
The Safest Option
One of the most secure types of loans that you can acquire is a 30 year fixed rate mortgage. This option ensures that your mortgage rates won’t fluctuate, and is perfect for those who are looking for a long term investment. If you are expecting to live in your home for a long time, this is something to seriously consider.
Other Types Of Loans
There are many different options to consider. Stopping in at your local bank to speak with them about what loans they offer can give you insight into options you might not have considered before. For instance, interest only and adjustable rate mortgages might be better suited for self employed individuals who might experience income fluctuations. However, as with every type of loan, it’s best to fully understand the risks of any mortgage before signing anything.
Downpayment
While mortgages typically require a downpayment of 10 to 20 percent, there are some programs that allow prospective home buyers to get a mortgage with little to no downpayment required. These programs are worth looking into, and if you can find a legitimate one, it can be a great deal.
Refinancing
Once you’ve acquired a mortgage there may be a time when you can choose to refinance your loan. This can prove especially useful if your credit has improved since the initial mortgage was taken out. This can help save money overall when done at the right time.
Buying a home is a big decision, and a huge investment. Understanding the different types of financing options, in addition to what influences investor decisions, can help you make a better informed decision.
