What to Know if You're a First Time Home BuyerMost people look forward to buying their own home one day. However, the process of buying a home can be a tedious one. This guide will tell you what to know and will make it easier for you to get the home of your dreams.
The standard down payment is 20 percent. However, there are many lenders that will allow you to pay as little as three percent. It is a good idea for you to save up for a down payment on a mortgage. You can use a down payment calculator in order to determine how much money you will have to save.
You Need to Save Up for a Down Payment
Your credit is one of the factors that will determine whether you can get approved for a mortgage. Most lenders will require that you have a credit score of at least 620. Even though it is possible for you to get a home with a low credit score, it is best for you to work on your credit before you apply for a mortgage.
You Should Check Your Credit
Paying your bills on time will help boost your score. You will also need to pay down your debts. Additionally, if you have past-due accounts, then you will need to pay them down.
If you are struggling to get a conventional mortgage, then you have other options. You can get a Fannie Mae or Freddie Mac loan. Those loans are backed by a government-sponsored entity. You may be able to get a loan for as little as three percent down.
Explore Your Options
You can also get a FHA loan. These loans are backed by the Federal Housing Administration. You may be able to get a loan with as little as 3.5 percent down payment. If you are a veteran or married to someone who is a veteran, then you can get a VA loan.
It is a good idea to review your finances and determine what you can afford. This is one of the most important tips that you need during the home buying process. A good rule of thumb to spend less than 30 percent on your housing costs. For example, you make $3,000 per month. Your housing costs should not exceed more than $1,000.
Look at Your Finances
You do not want to be in a situation where you are spending the majority of your money on your housing. You will also need to consider the cost of utilities and home maintenance.