Mortgage Checklist for First-time Home Buyers
1. Save, save, save. It’s easier to get a mortgage when you have a 20% down payment plus a little extra cash for mortgage-related expenses, planned improvements and unexpected maintenance.
2. Know where you stand. Check out your credit report and credit score by visiting http://www.consumer.ftc.gov/articles/0155-free-credit-reports. Your credit history is a primary deciding factor in the mortgage approval process. Lenders generally look for credit scores between 300 -900 to start the mortgage application process.
3. Improve your credit history. If your credit history and credit score aren’t strong enough, set up a plan to make changes and improvements over the next year to boost your credit rating.
4. Consider the monthly cost of home ownership. Start with what you’re currently paying for housing or rent. Then add on projected property taxes, insurance, increased utility expense and a rainy day fund for unexpected or planned maintenance for your new home. How does that new monthly total expense fit into your budget? Is it comfortable or a stretch?
5. Set a realistic price range. Using this helpful tool, you can test a range of mortgage amounts to learn what the monthly payments will be and how each fits your budget. Remember to add your down payment to the mortgage amount to determine the actual purchase price.
6. Think about what you’re looking for in a home and how long you plan to live there. Is this a starter home for a few years … or do you plan to stay there forever? This may influence the type of home you buy, where you buy and the kind of mortgage that is right for you.
7. Partner with a trusted lender who will provide you with good information and answer your questions. As a first-time home buyer, it’s a good idea to schedule face-to-face meetings to be sure that you have a good understanding of the mortgage process and feel comfortable with your lender.
8. How do you compare with other first-time home buyers? Take a look at these statistics from a 2012 Profile of Home Buyers and Sellers Survey by The National Association of Realtors:
- First-time homebuyers account for about 40% of home purchases
- Median age is 31
- Median income is $61,800
- Typical house price is $154,000
- Typical house size is 1600 square feet
- Source of down payment: savings 76%, gift 24%, retirement account 11%, borrowed money from a friend or relative 6%, sold stocks or bonds 6%
Still have questions? Call us today at 1-877-322-9530 and one of our friendly Mortgage Loan Consultants can help put you on the path to home ownership success!