Think that you are ready to buy your very first home? You are going to have to think about getting your first mortgage because you can make that big purchase. Here are some tips that every first-time home buyer should know about getting a mortgage.
Get Pre-Approved Early On
Many people start the home-buying process by looking at homes. However, it should really start with getting pre-approved for a mortgage. After all, how are you going to find a home that you want when you don't know how much money your mortgage will be approved for? The pre-approval process will help let you know the size of the loan that a lender will qualify you for, which can quickly eliminate homes in a higher price range or open you up to new possibilities.
In addition, that pre-approval letter can help you place a winning bid on the house that you want. Sellers tend to go with buyers that they know will have their financing approved. If you are a first-time home buyer and don't have a pre-approval letter, know that the seller would be taking a huge chance with you due to the possibility of your mortgage falling through.
Avoid Big Purchases
Another mistake new home buyers make is getting ready to move in and buy new furniture and perform home repairs. This can lead to taking advantage of sales or simply getting ahead of themselves and making big purchases prior to closing on the home. While you may not think this is a problem, know that the mortgage underwriters are going to check your credit again before you close. If they suddenly see your credit card balance shoot up unexpectedly, it could make you look like someone who is irresponsible with credit. This can sometimes lead to a mortgage not being approved. Just wait on making those big purchases until after you close on the home to be safe.
Buy Mortgage Points If It Makes Sense
You will have the opportunity to buy mortgage points, which is essentially a way to pay cash up front to lower your interest rate for the life of your loan. However, you should only do this if it is worth it. Work with your lender to find out how long it will take to essentially break even with the mortgage points that you want to purchase. Does it seem like you may be moving to your second home by that time? If so, it won't make sense to buy mortgage points.
Share20 May 2021
When I began my first business selling sports equipment locally, I knew the sports-world well, and I knew how to run a business. One thing I did not know a lot about was the financial world. I had never applied for a loan in my life other than when I financed my car with the dealership in-house financing. My first application at a large bank was denied. I began looking into my other options, and I found that there were more lenders for new businesses than I realized. I applied at local credit unions, local banks, and other business lending services. I was able to secure more funding than I even expected, and my credit is just average. I created this blog to help other new business owners realize that there is funding out there. You just have to find it and apply! Don't give up on your dream.