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Mortgage Tips for First Time Home Buyers

July 14, 2011

mortgageIf you’re in the market for a new home, there are certain things you need to keep in mind. This is especially true if you’re a first time home buyer. Getting your first mortgage can be intimidating, but if you’re patient and do your homework you should be able to get a mortgage with reasonable rates. Following are a few tips for first time home buyers.

Preparation and Organization

Being a first time home buyer means you’ll have a lot of things to learn. Among them are that preparation and organization are important. If you’re not good at these things, you should take the time to train yourself, because rushing headlong into getting a mortgage will cost you a lot of money. Instead, learn to be patient and take things one step at a time. Before you approach a lender, you need to be prepared by gathering and organizing all the documents you’ll need. If you go into your first loan application meeting with all your ducks in a row, it will make the process go much smoother, and you will be one step closer to owning your own home.

Gather Information

Before taking that first step toward the purchase of a new home, you should take the time to gather all the information you’ll need to get a loan. Among the first steps is to find out what your credit score is. You can do this by calling one of the three credit reporting bureaus: Experian, Equifax, or TransUnion. This will give you a good indication of how much credit you can reasonably expect to get, and will also give you some insight into what sort of interest rates you can look forward to paying. Knowing your credit score will help you determine the price range of a home you can realistically afford to buy. Keep in mind the fact that you will not only have to pay a mortgage, but all the other expenses associated with owning a home, such as utilities, insurance, and maintenance. You will also need to have proof of income, such as tax returns, in order for the lender to decide on the details of a loan.

Research

Determining ahead of time what type of loan to ask for, or that you qualify for, such as a FHA, VA, or conventional loan. Ask your friends and relatives that already own their homes about what type of information you should collect before approaching a lender. The Internet is a valuable resource for this type of information, as well. The more prepared you are when you actually start looking for a home, and subsequently a lender, the better off you’ll be. You may even want to seek the advice of a loan counselor. They would be able to determine what type of loan is best for you.

Patience Is a Virtue

Once the wheels are in motion, the process can seem excruciatingly long, but keep in mind that important decisions have to be made as to whether or not a lender wants to take a chance on you. They need to be sure you will not only be able to pay back the loan in a timely manner, but that you have the character to do so. They may ask for additional information along the way. Be sure to respond in a reasonable amount of time, and don’t be put off by delays. When the loan application comes through, you can start looking for a home.

The Search Begins

When you’re sure you will be able to get a loan, and you have a general idea of how much you can reasonably expect to get, you can actually start looking for a home. Decide on the type of neighborhood you want to live in, and start checking for houses that match your income and loan potential. The Internet is a good place to start looking, but simply driving around and looking at for sale signs is a good way to spend a Sunday afternoon. Once you have a general idea of the type of home you’re looking for it may be time to contact a realtor. Then the search can begin in earnest. The process of buying a home has many steps, but knowing ahead of time whether or not you qualify for a loan, and how much you will be able to borrow, will determine the type of home you can actually afford.

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