Before You Buy Your First HomeTips for First Time Home Buyer
If you have never bought a home before, the idea of getting a mortgage and finding a home can be incredibly daunting. There seems to be mystery surrounding the process, especially with more and more people waiting until their late twenties and early thirties to finally quit renting and invest in a home. However, it doesn't need to be a mystery. If you do a little bit of homework and walk into the process educated and prepared, you might find that buying a home is a lot easier than you thought it would be.
How's your credit?
The first thing you should do is take a look at your credit report. There are three agencies that issue reports: Esperian, Equifax and Transunion. These reporting agencies create your FICO score which will be used by your lender to determine what sort of credit risk you are. Basically this means the higher your FICO the lower your interest rate and the more likely you are to get a loan. Your FICO score is so important that you should stay on top of your credit reports. Each agency offers a free report annually and you should take advantage of this to check your score.
Knowing what your FICO looks like will allow you to work on raising your score, catch any mistakes and quickly take action if you are a victim of identity theft.
What are your needs?
If your credit is in great shape, the next thing you need to determine is your needs. If you plan to work at home, you'll need a home with an extra room for an office. Maybe you need a large yard for children or an even bigger property for horses. Do you entertain a lot? Then maybe a large kitchen is a priority. Location may also be important if you commute to a job or need to live in an excellent school district. Figure out what features in a house are a must, what are desirable and what are unnecessary. This will help you begin your search and get some idea of what your finances need to look like to get a house that makes sense for your lifestyle.
What can you afford?
Understanding what you can afford is a critical factor in the process of buying a new home. Take a hard look at your income, your expenses and evaluate what a house will actually cost. A mortgage banker or real estate agent can help you crunch the numbers. It isn't enough though to figure out how big of a mortgage payment you can make and squeak by. You'll have to keep in mind a home has extra expenses like insurance, property taxes and repairs.
Learn about your mortgage options
It is also important that you do some research and learn about the different types of mortgages that are available to buyers.
If you are a first time home owner, there will be special options available to you, especially if you have a lower income.
You'll also want to learn about the difference between fixed rate, adjustable rate and the various exotic mortgages. The more you know, the more likely you will have a loan that you can comfortably make the payments on monthly.
Work with professionals
The internet is a great resource and researching online can give you more confidence when you meet with mortgage
agents to help you with this important step in your life. Don't try to do it on your own though. Find reputable professionals and they will be worth the expense. Ultimately they will save you time and money and relieve a tremendous amount of stress and confusion.
The sooner you start investigating your options, the faster you will be able to get your finances together and finally get into your first home. What are you waiting for?
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