Buying a home for the first time may be exciting but it can also be frustrating. Buyers who aren’t prepared to meet the lender’s requirements or for the expenses associated with buying a property may be overwhelmed. This can happen even before they are able to get the keys to their new home. There are some things every prospective home buyer should do before they seek a preapproval for their first mortgage loan.
Credit
Credit can affect interest rates but it can also determine whether a buyer is able to purchase a home. Six months prior to walking into the bank to talk to a loan officer, anyone who wants to buy a home should get a copy of their credit report and check it for accuracy. Errors need to be corrected before the loan officer pulls a copy of the report. Buyers should avoid applying for new credit. Inquiries can lower their credit scores and cause their preapproved interest rate to be higher.
Get Documents in Order
Mortgage lenders require a lot of personal information. There are some documents a loan officer may ask to include. Things such as two years’ worth of W2s, two years’ tax returns, two months’ bank statements, recent pay stubs, a photo ID, divorce decree and bankruptcy discharge papers. Having all of these documents in order will make the processor’s work easier. It will also help the loan packet get to the underwriter faster.
Down Payment
Although the standard down payment is 20 percent, it isn’t always necessary for first time home buyers to save that much. There are several loan programs available today that require much less down. Federal Housing Administration Loans may be available to first time home buyers for as little as 3.5 percent down and veterans may be able to get loans with no down payment at all. However, regardless of the loan program, a buyer may have to pay mortgage insurance if save less than 20 percent for a down payment.
Maintenance
One important aspect of Home Buying people often don’t consider is the cost of maintaining the home after they close. The best way to avoid immediate maintenance costs is to have a home inspection. Although the buyer generally pays for the inspection, it may pay for itself in reduced maintenance expenses. After completing the assessment of the roof, basement, windows, insulation and HVAC, buyers may use the final report to negotiate with the seller. The seller may agree to make repairs or reduce the price of the house to compensate for flaws. A Real Estate Agent in Madison WI can help a first time home buyer negotiate with a seller.
First Time Home Buying doesn’t have to be frustrating. The more a buyer prepares in advance, the easier it will be to get approved for a mortgage and move into a great home. The planning process should start long before the family starts looking at houses. Shopping for a home can be a lot of fun if the family gets preapproved for a mortgage loan prior to attending the first open house.
