Buying your first home can be the biggest and most important purchase of your life, but it doesn’t have to be painful. Knowing the process and being prepared for each step can prevent many headaches -- and save you money. To help, we’ve gathered expert commentary, relevant data and even our personal home-buying experiences to guide you from the initial search to the closing table. Learn where to start, how to get pre-approved for a mortgage, how much home you can “actually” afford and how to get the best mortgage rates. And just so you’re sure, a first-time home buyer is someone who has never owned a home, or someone who has not owned a home within the last three years.
Step 1: Building and improving your credit
Before you contact a Realtor or mortgage lender, you need to know if your credit is good enough to qualify for a mortgage. This is the time when you should pull your credit reports and take the necessary steps to ensure you have built up a sufficient credit history and that your score is as high as it can be. The higher your credit score, the lower the mortgage rate you'll receive. This is the appropriate time to correct any errors or inaccuracies on your credit report which may trip you up later.
Step 2: How much house can I afford?
When buying a house, one of the most important questions you need to honestly answer is "How much house can I afford?" To answer that, take inventory of your monthly income versus your monthly debts, as well as how much money you have saved up, to determine how much you can afford to pay each month and how much you can put towards a down payment.
This is also the time to assess your future goals and plans to help you determine which loan product will best fit your needs.
Step 3: Getting preapproved
One of the most important parts of the homebuying process is getting preapproved for a loan amount. Preapproval is
important because it lets sellers know you’re serious, and it gives you an accurate estimate for how much money a lender will allow you to borrow.
Step 4: Picking the right mortgage
Every year, millions of people get a mortgage, even though they are complicated and anxiety-inducing. So how do you choose which mortgage is right for you?
First, you need to determine if you want your mortgage to have a fixed rate (a rate that never changes) or an adjustable rate (a rate that can move both up and down). Second, you need to determine how you plan to live in your home for. Determining your timeline will help you decide on both loan type and term.
Step 5: Preparing your documentation
After your mortgage application has been approved, it’s time to prove your worthiness to your mortgage lender by
supplying up to two years’ worth of documentation. Be prepared to gather past tax returns, pay stubs, bank statements, and more.
Step 6: Closing your loan
Once your documentation has been submitted and you have been approved, it’s time to close on your loan. This process can involve offers and counteroffers, and this will be the time you get your home inspected. When the contract is finally signed and your financing is in place, a closing date will be set. A final walk-though should be scheduled just prior to the closing to be sure nothing has changed since you last saw the house. When you move into the new house, you'll need to have homeowner’s insurance in effect.
This article was abbreviated from: (http://www.hsh.com/first-time-homebuyer/).
For more information on getting preapproved or picking the right mortgage contact Jason Nader; phone: (443) 716-1235, or email: firstname.lastname@example.org.