Loan Tips for First-Time Buyers
Home buying is an exciting venture especially if you are doing it for the first time. However, there a number of ways you can be mislead if you do not have proper guidance or know how so today we’ll discuss some basic loan tips for first-time buyers.
As you may have figured by now, there are many benefits and programs available for first-time homebuyers. With that said, there are also a number of issues related to obtaining a loan that can be very confusing if they are not approached correctly. Thankfully, doing a little homework beforehand will save you from walking into unforeseen pitfalls.
Here are a few tips that may be valuable to first-time buyers.
Make Sure Your Credit Score Is Up to the Mark
In order to qualify for the right home loan, there are some things you need to know about your credit and mortgages. According to Bankrate, a credit score of 740 of higher will help you qualify for the best interest rates from most lenders. On the other side of the spectrum, buyers with credit scores below 620 may be eligible for specific types of loans and generally credit scores may affect your interest rate by more than a full one to two percentage points. For certain types of home loans, you need to make sure that your credit score is within the required range according to the lender. If you do not know where you stand with respect to your credit score, you can find out through websites like AnnualCreditReport.com. These websites can generate up to three different reports from separate bureaus free of cost.
For an additional fee, you can also find out the exact numeric value of your credit score. Basically, your score depends on the use of credit according to the credit limit. Check and double-check these reports for underlying mistakes, unpaid debts and accounts or collection accounts. A damaged credit report decreases your chance of qualifying for a loan. Generally, this process should be started at least half a year before you begin shopping for a home so that you have some time on hand to repair damages on a report, if any.
Analysis of Assets and Liabilities
Before buying a home, you should have a clear idea about the payments that you will have to make in the future. Your lender will require the mortgage money every month without fail and for that reason you need to research on the basics of mortgage lending. In some cases, your monthly pay at the end of the month may be on a commission basis, but that reason does not excuse you from paying your mortgage on time. According to most State laws, a self-employed or independent contractor will have to provide a reliable two-year earning history in order to qualify for the loan.
Keep Important Documents Organized
Keeping records of your income tax return reports, bank statements, etc is absolutely essential if you hope to qualify for a loan. Mortgage lenders require authentic and require complete documentation from at least the last two years.
Usually, FHA loans are flexible in the down payment amounts, and mortgage calculators help give some very preliminary information to some for first-time buyers. However, even this amount can be a little overwhelming for a young person or couple. Before finalizing on the mortgage lender, make sure you research the market. Ask friends, co-workers and neighbors to guide you to reliable and understanding mortgage lenders. Make sure you have all your doubts regarding the process cleared before you embark on this quest!
If you have any questions about where you stand, Get Started here to expertise the experts connected with FHALoanSearch.