What to Know if You're a First Time Home Buyer

Most 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.

You Need to Save Up for a Down Payment

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 Should Check Your Credit

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.

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.

Explore Your Options

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.

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.

Look at Your Finances

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.

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.

It Is A Good Idea to Get Pre-Qualified

A pre-qualification means that you meet the basic requirements that have been set by the lender. It will also tell you how much the lender will be able to give you. If you have the pre-approval letter in your hand, then it will be easier for you to find a lender who is willing to work with you. It can also give you an advantage over someone who has not gone through the pre-qualification process.