The average buyer may not be acquitted with the lingoes that go with purchasing a home. Since property purchase takes a considerable income of savings of individuals, it is important to be acquitted with real estate terminology, used by both agents and mortgage lenders.
The most important part of purchasing a property involves getting a mortgage.
The following are mortgage tips for first time homebuyers
#1: Understand Your Numbers
Many people who qualify for purchasing homes, normally end-up paying more than they had expected. There are daily expenses that were not considered on the credit report; like annual vacation or buying a car after one year.
#2: A Down Payment is only a small segment of the amount required to Purchase a Home
There are loan facilities like the VA loan or the FHA loan that allow you to qualify for a small down payment or no down payment mortgage. These facilities allow you to feel relieved at the point of purchasing, by allowing you to save thousands of dollars. However, we should note that down payment is only a small segment of home purchasing.
Apart from down payment, you will require to pay earnest money, which is usually 5% of the purchase price. Earnest money is usually paid when place a contract to buy a certain property. After your loan has been approved, the earnest money is used to cater for closing expenses. However, you are required to pay upfront as a sign of good faith.
#3: Ensure Your Credit Score is High as Possible
It is easier to qualify for lowest mortgage rates and small down payments loans, if you have a higher credit score. However many buyers are not aware of this fact after deciding to buy a home.
#4: Budget for extra expenses besides New Home Payment in Your Budget
As a new homeowner, you should give provisions for expenses like maintenance and repairs besides the new home repayment. You are likely to incur expenses for plumbing, electricity or heating or roof replacement.
It is prudent to set aside around 15% of mortgage repayment to cushion on expenses like repairs or replacements, which acts like a kitty for a rainy day.
#5: Secure a Pre-Approval for a Mortgage
Any homebuyer should first seek a mortgage pre-approval from their local lender, before beginning to look for a house to purchase.
This Will Be Instrumental In:
- It will enable you to budget on the price range of the property you can afford.
- It will be a sign of commitment to real estate agents and facilitate negotiation with sellers.
You will be required to provide income information to the mortgage lender that is subjected to credit checks, before qualifying for a pre-approval. As seasoned mortgage lender can seamlessly go through you credit history and other financial documentation; and come up with an appropriate mortgage program and the best type of loan that will suit you in purchasing the property.