5 Tips for first time home buyers
Owning a home is a really good investment everywhere in the world. For most people out there, it is their most important goal. To own a house, you must finance your home ownership by obtaining a home mortgage from a lending institution. This article will guide you through the steps that you need to take in order to qualify for a home mortgage loan.
Step 1: Find the perfect home for yourself
· How big is your family?
· What kind of neighborhood do you like to live in?
· Are your children’s schools an important factor to you?
· How much can you afford?
All these factors differ from one family to another. Some people care about their children’s education rather than the neighborhood or size of the house. So you’ll have to find the ideal home, in your neighborhood of your choice, price that you can afford, but realistically, most people will have to make some compromises.
You should also make a list of the features that you would like to have in your house. Some include:
- Number of bedrooms - Number of beds - Kitchen size - Fenced yard – Garage – Pool
Then based on your priorities, you rank them, and decide what you want. All of these decisions will be made before beginning to search for a new home. AmericanLending.com is where you want to start, in order to get the perfect loan for your perfect future.
Step 2: Down Payment
Almost all lenders and mortgage loans need some amount of cash as a down payment. The amount of money that you keep aside will determine the kind of mortgage that you are will to go for. This also impacts how much you can afford to borrow for a new house. You should consider assistance for the down payment. You probably searched “How to buy a house”, and you got was “Step 3” in our guide. It’s important to note that there are over 2,500 home buyer assistance all over the United States, that offer different types of loans and down payments.
Step 3: Calculate what you can afford
There are several things that you must calculate in order to buy a house. You should:
· Consider your Income:
Many banks will require that your monthly costs cannot exceed the % of your income (ex: 28%). That means if you earn $100,000 per year, the maximum cost that could goes to housing is 28% of it. And it’s more than just your income that the bank will look at..
· Consider your Debts:
If you already have debts, the total payments of your month on the existing debt + new payments for your mortgage cannot exceed a certain amount as well. It differs from one person to another.
· Consider the Down Payment
We can say most or all lenders prefer a down payment of 20% or higher to give you the loan, but there are other options where you can make less when you cannot afford it. However, there’s a disadvantage if you want to have a smaller down payment. You’ll likely be required to pay for mortgage insurance and your loan application will be subject to greater security.
Step 4: Compare Mortgage Lenders
A huge mistake that most people do, is that they don’t search well enough for a mortgage lender. Don’t fall into this trap. Make sure you shop well, and ask people around for the best lenders in order to get the perfect deals. It might take time, but it’s worth it, because this lender might stay with you for the next 40 years or so. Once you choose your lender, you cannot just switch them around whenever you want, you’re basically stuck. Once you choose your lender, you should tell them the truth and not be shy about anything. Mortgage quotes can vary based on your down payments, credit score, income, … This is why you should fill the form with full honesty.
Step 5: Get Pre-Qualified
You’re almost there! By this point, you have a pretty good idea about what type of house you’re looking for, and how much down payment you’re willing to pay. These two will determine the type of loan that you want to pursue. You should request a pre-qualification letter.
Getting Approved: American Lending offers “Approvals” after they verify your assets, credit, and income. Having a pre-qualification letter in hand could be the difference in your ability to purchase the house you desire. This letter proves to the seller that you’re serious and provides you with a bargaining power, which gives you an advantage over other buyers.
As a conclusion, buying a house might be hectic, but by doing the right research and choosing the right lender, you’re going in the right way! Patience is the key!
For more information, contact us, and we will be more than happy to lend you! 949-342-1234