This article addresses many common questions first time home buyers often ask. It is a must read article, with loads of valuable information that will save you both time and money.
First of all, you might be wondering what kind of a credit score you need to secure a home loan. Today it s harder than ever to qualify for mortgage. Stricter lending criteria are the cause. The minimum credit score you ll need to qualify for a loan in today s economy is 670. To secure the best rates, 750 or higher is where you ll need to be.
Second, you might be asking how large a mortgage loan you can afford. This is a question you must answer for yourself and you must be completely honest. Keep in mind; you are the one that knows your budget and your current obligations. The mortgage lender is only there to tell you how much they are willing to lend to you. It is very possible to get a loan that is too big for you, so make sure you don’t make this unfortunate error.
Third, prior to talking to home lenders you need to create a realistic budget. Subtract your monthly expenses from your net after tax monthly income, and this will be a good starting point to base your projections on what size mortgage you can afford. Don t forget to exclude your current rent payments, which of course will not be present when you own your own home. Also, don t forget about variable expenses such as entertainment, savings, and whatever debts you currently have, especially credit card debt. The monthly limit you should observe is found by subtracting these expenses from your monthly income. Never exceed this maximum amount, and you should be fine.
Fourth, get preapproved for a home loan long before you starting your house hunting. This will save you loads of time by limiting your search for homes to ones you can actually afford. An ancillary benefit will be that you will be taken far more seriously by sellers since your financing is alread lined up. Getting this financing is a very simple process. All you have to do is contact your lender, and let them know you d like to be preapproved for your loan. They will let you know exactly what you need earning the meeting to make the best use of your time. Typical items they will have to bring include bank statements, pay stubs, and information on your debt.
Buying a home is a stressful experience for most first time buyers. But it certainly doesn’t have to be. By making sure that you actively work to improve your credit score, know in advance how large a loan you qualify for prior to beginning house hunting, create and work within a realistic budget, and get pre approved long before you start your search in earnest, you will be light years ahead of the game. Making sure you do these things will definitely make buying your first house less stressful and more enjoyable.
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