Buying a home can be complicated, especially for a first time home buyer. There’s so much to do, and so many unfamiliar terms to understand. Here, we offer some home loan advice to help you navigate the process more easily.
- Be smart about saving for your first home. Determine a reasonable price range, based on your income, debt, available down payment, credit score, and where you’d like to live. Start saving early, so that you can have a reasonable down payment when it comes time to purchase your home.
- Work on your credit. Before you start shopping for a home, take a look at your credit score and be proactive in strengthening it. Get copies of your credit report from all three credit bureaus- Experian, Equifax, and TransUnion- so you’ll know where you stand. Dispute any errors that may be hurting your score, and then get to work improving it. Keep your current credit cards open, because longevity of accounts works in your favor, but pay them down as low as possible, to improve your debt to income ratio. Pay all of your bills on time because this is a major factor in your creditworthiness. Keep an eye on your credit score because it can fluctuate during the time you’re shopping for a home.
- Understand your mortgage loan options. If you qualify for a conventional mortgage, you’ll need to look at mortgage rates and the term you’d like for your home loan. A 30 year mortgage is standard, but if you can afford a higher mortgage payment and want to pay off your home earlier with less interest, consider a 15 year mortgage. If your credit is not great, you can probably still get a mortgage, through special programs available to first time home buyers. These include:
- FHA loan: a government-backed loan program for buyers who don’t have strong credit.
- VA loan: no down payment, available for borrowers with connections to the military.
- USDA loan: available for rural properties, offers 100 percent financing.
- Fannie and Freddie: conventional loans that only require 3 percent down.
- Get a preapproval letter. Submit your financial information to a lender, and if you’re approved, you’ll be provided with a preapproval that details how much you’re qualified to borrow. Having a preapproval letter shows realtors and sellers that you’re a serious buyer.
At First Coast Mortgage Funding, we offer creative solutions to help borrowers improve credit and overcome roadblocks when trying to secure home financing. Committed to helping people in the First Coast region buy and refinance residential properties, we specialize in every kind of property, working to provide home loans to our clients at the lowest interest rates, with the best possible service. Contact us through our website or call 904.217.5450 for more information.