Purchasing your first home can be quite intimidating, so careful preparation for the process is vital. Purchasing a home is a big task.
When buying one’s first new home, there are many things that the buyer must consider to be sure they are prepared for all the steps involved in the process.
Before doing anything else, first time home buyers should get rid of any debt they are carrying. This is a step that most home buyers try to avoid in an effort to save more money for their down payment. What they don’t understand, is that by carrying a smaller amount of debt, you will help offset the need for a big down payment. Because the mortgage interest rate is heavily dependent upon the amount of debt a person carries, it is better to carry a low debt amount. The more debt one carries, the higher the interest rate is likely to be; some banks even refuse to write mortgages at all for people with high debt amounts.
When someone has a huge amount of debt, it puts limitations on what the new home buyers are able to save. You wind up paying more interest on your credit cards than you pay toward your mortgage because interest rates on credit cards are more than twice those of mortgage rates. A first time home buyer should concentrate on paying off some of his/her debts, beginning with credit card debt, rather than putting money away for a down payment. When the time comes to apply for a mortgage loan, lenders will find a lower debt load more attractive than a large down payment.
First time home buyers would be wise to obtain a copy of their credit report from all three credit agencies: Equifax, Experian, and TransUnion. Go over your credit reports with a fine tooth comb to verify the information they contain is accurate. You should challenge any false information like wrong accounts, reports of late payments, etc. You would be shocked to see the amount of creditors who fail to update credit reports once problems have been taken care of.
Once you have disputed any inaccuracies that appear on your credit report, first time home buyers should next concentrate on paying off items that have been sent to collection. If you have outstanding debt, it can interfere with your obtaining financing. Verify that t 1000 he payment on every line of your credit report is up to date. A habit of paying your bills late is another red flag to potential lenders. As a rule, you should have six months clean credit before trying to obtain mortgage financing. Do not apply for any additional credit during this period.
Before shopping for a new house, first time home buyers need to figure out an affordable amount to be budgeted for regular mortgage payments. Generally speaking, a first time home buyer should have a debt load that includes the mortgage payment of no more than 40% of his/her monthly gross income. Less debt makes affording your monthly payments so much easier.
There are definitely bargains available due to the many foreclosures, bank owned homes, short sales, and other distressed properties that are currently on the market, but you will need an experienced realtor who knows the ins and outs of these more involved sales and their potential problems. If it is necessary to finalize an offer on your first home, you will be able to respond quickly because you will have your pre-approved loan and you will be prepared as a result of following the advice presented here.
People buying their first home have a lot of work to do. Preparation is your best tool when beginning this very stressful process. Preparing ahead of time helps the first time home buyer buy a home more easily.
By: Skyah Jamsen
Preparation is the Best Tool for the First Time Home Buyer
People buying their first fef home have a lot of work to do. Preparation is your best tool when beginning this very stressful process. Preparing ahead of time helps the first time home buyer buy a home more easily.
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