First-time homebuyers are often super excited about buying their first home until they delve into the complicated process of obtaining financing for that home. To the untrained buyer, purchasing a home can be quite an overwhelming experience.
It is important to research the homebuying process before the first property search begins. Every piece of information a person needs to know is available online. Take a moment to start learning, and read over this short summary of a few of the most important financing tips every first-time homebuyer should know.
Get those pesky ducks in a row
Before every looking at the first home, there are a few things a person should have in order. Buying a home is a huge financial undertaking. It makes sense that a person would need to have their finances in order to qualify for a home loan.
Try meeting with a mortgage officer, who can dig up more information. If there are any discrepancies on a person’s credit report, this is the time to address those charges.
Pay down outstanding debts
After new homebuyers are through investigating their credit history, it is time to get to work paying down those outstanding debts. A clean credit history makes for a much easier home buying process and better interest rates on mortgage loans.
Gather knowledge concerning the different types of mortgage loans
Now is the time to do a little independent research. Before ever walking into a lender’s office, people should understand the many different options available to them when it comes to mortgage loans.
Walking into a lender’s office with no prior knowledge of what lies ahead is careless and sloppy. Do the homework. Here is a brief breakdown of a few of the most common lending options.
Conventional Loans – Fixed-rate loans that are not backed by a government guarantee. They are the most difficult to qualify for as they require a certain down payment, credit score, and income bracket.
FHA Loans – Federal Housing Administration loans are a supplement of the U.S. Department of Housing and Urban Development. FHA loans have lower down payments, and it is easier to meet the qualifications required. For some, they allow down payments as low as 3.5 percent.
VA Loans – The U.S. Department of Veterans Affairs guarantees the VA Loans. They do not actually do the lending themselves, but they guarantee mortgages made by qualified lenders. VA loan recipients typically get more favorable terms during the lending process.
Meet with several mortgage brokers or lenders
Once a person feels that they are armed with the proper knowledge, it is time to begin the hunt… for a mortgage broker or lender. Meet with several mortgage brokers or lenders to get a good feel for just what works best for a personalized budget.
From there, the process of finding a home and closing the sale begins. Happy hunting!