7 Tips for the First Time Home Buyer
Buying your first home can be exhilarating if not a worthwhile rite of passage. Besides having your own home, tax breaks as well as building equity are additional benefits. The following "first time home buyer" tips will help you shift from paying rent to owning your own home.
1) Down Payment
As a first time home buyer, the amount of money you can afford to pony up as down payment matters a lot. To be on the safe side, make sure you can afford mortgage payments without exceeding 28 percent of your gross income. In addition, you should be ready to pay up to 5 percent of your home’s total value as closing costs.
2) Your Credit Score
For a first time home buyer credit score is one of the most important factors when buying a home. Qualifying for a loan if your credit is less than perfect can be nigh to impossible. However, government insured loans might come in handy if this is the case. The FHA offers home loans based on a less stringent credit criteria.
3) Evaluate Your Spending Habits
Qualifying for a loan is the easy part, keeping up with monthly payments calls for dedication. Take time to evaluate your monthly cash flow and spending habits. This should give you a good idea of how much money you can set aside to make loan payments.
4) Types Of Loans
If you are a first time home buyer with good credit and a steady job, getting a mortgage is easy. At the same time, premiums depend on the amount of money you can afford as down payment. The more money you put down, the more mortgage loan options financial institutions will offer.
5) Talk To Real Estate Agents
Never trust all the information you read online. It is wise to have a chat with a real estate agent before making any financial commitments. You will glean invaluable information concerning closing costs, crime statistics, home insurance options, and property price movements.
6) Pay Off Debt
This is a rule every new homebuyer should observe religiously. Most lenders use credit score information to model the risk of borrowers defaulting. Keep your credit card debt as low as possible.
7) Organize Documents
During the home buying process, you will have to provide certain documents. These include tax return documents, recent paychecks, W-2s, and bank statements. Make sure you have all these documents in order.
(creative commons photo credit)