Buying a home is a major life decision. Chances are you will be paying down your mortgage for at least a decade or more. It's a major financial commitment and one that should be considered carefully. While you may be focused on finding the right property for your needs, it's important to carefully consider financing before taking the plunge. Your mortgage will play a major role in your overall financial well being for years to come. Here's what you should know before taking out your first home loan.
Options for First Time Buyers
The first thing that you should be aware of is that there are a variety of mortgage loan programs that are available for first-time buyers. Some programs and loans that you may want to consider include FHA loans, VA loans, USDA loans, the Good Neighbor Next Door program, and HomeReady HomePath mortgages. There are a variety of other loan programs that may be beneficial for first-time buyers. Before taking the plunge, it's important to take a close look at your options and also to shop around.
Your Credit Matters
Another thing to consider before purchasing your home is that your credit matters. The higher your credit score, the lower your mortgage rate. A lower mortgage rate will save you thousands of dollars over the course of your home loan. Requirements can vary significantly from lender to lender. Typically with FHA loans you will need a score of at least 580, though there are exceptions. With a VA loan you will need a credit score of at least 620 while USDA loans typically require scores of at least 640. Conventional lenders typically require credit scores of at least 620. If your credit score is low, you may want to take steps to improve it before seeking out a mortgage.
Down Payments Can Help
Saving up a large down payment can be a challenge, especially for those who live in high cost of living areas. While many mortgage loan programs allow you to secure a loan with as little as a 3 percent down payment, having a larger sum on hand can be beneficial. A down payment of 20 percent or more will allow you to avoid having to pay private mortgage insurance, or PMI. Larger down payments also signal to lenders that you are serious about home ownership. A larger down payment may help you secure a more favorable mortgage rate.
If you are thinking about taking out your first mortgage, there are a few things to know. First, there are a variety of programs for first-time buyers. Shopping around can help you find the right loan for your needs. It's also important to note that your credit matters. Having a good credit score is key. A larger down payment can also help you secure a favorable mortgage if you are a first time buyer.Share
27 April 2019
I always wanted to buy my own home and after saving enough money for a down payment, I decided that it was time. Before I started looking at houses, I talked with a loan officer about financing. I wanted to know how much money I could borrow so I could look at houses in that price range. I was very happy after my meeting at the loan company and I was ready to start house hunting. My name is Jarod Spangler and I'm now a homeowner. If you have the dream of owning your own home, I think you'll find my blog of help to you. I've documented my journey of saving money, securing a loan and purchasing a house. To help you become a homeowner too, I'm offering advice and tips of things that I've learned along the way.