First Time Home Buyer Tips
Are you a first time home buyer? Whether you’re a recent college graduate or buying for the first time after working for many years, there are many things potential homeowners should contemplate before making a purchase. Making a mistake when it comes to buying a home can be very costly. It is critical to do your proper due diligence before making one the most important decisions of your life. We’d like to help you avoid paying for mistakes you can avoid, and below are some first time home buyer tips that may help.
What type of mortgage?
Choosing the mortgage that’s right for you is one of the largest decisions homeowners make before buying their home. Fixed and adjustable rate mortgages each have their own benefits, but choosing the wrong one for your needs can be costly. To ensure that doesn’t happen, buyers should ask themselves these three critical questions:
- How long they plan to live in their new home?
- How much down payment can they afford?
- How high are interest rates a purchase time?
Fixed mortgages are generally be better for homeowners who plan to stay in their homes for a long period of time. This is a great option for a steady income buyer who can fulfil the consistent payments. Adjustable rate mortgages rise over time, which means homeowners committed to long periods of time might find themselves making higher monthly payments several years later than when they first started. If you have room in your budget for an increasing payment, an adjustable rate mortgage may not be for you.
Adjustable rate mortgages can be great for those who think they might be living in their home for only a few years. If an individual purchases a home when interest rates are low, they will be rewarded with lower rates on the monthly payments and leave before rates increase. Adjustable rate mortgages could also be a smart choice if interest rates are high at the time of move-in. In this case, as interest rates fall over time, homeowners will see their monthly payments drop.
Check your credit
Your credit score is a critical component of what lenders look at when they are determining whether to approve someone for a loan. In simple terms, credit can make or break your overall package when deciding on which mortgage option to choose. Banks will typically look at your credit score, as well as search for unpaid collections, bankruptcies or foreclosures. It is critical to have a good credit score and reduce your debt-to-income ratio in order to look favorable in a lender’s eyes.
If you keep these tips in mind, you’ll be on the path to a successful first time home purchase. If you ever have any doubts or questions, talk to a qualified mortgage professional.
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