You have worked your fingers to the bone, and now it is time to buy your first home. Congratulations! However, you need to know that the entire process of buying a home is no child’s play. In this article, I share important tips for the first-time homebuyer. Therefore, if you are purchasing the first home, here are important ideas to bear in mind.
Table of Contents
1. Start Saving for a Down Payment Early
If you intend to apply for Utah housing first-time homebuyer program to finance your American dream, start setting aside some money that you can use to pay the down payment. The savings will also go into paying the closing costs. Thus, even if you qualify for the Utah housing down payment assistance programs, you will still need money to pay for the closing costs. Further, consider that paying a down payment of 20% means that you will not have to worry about private mortgage insurance. Thus, if you start saving for the down payment early enough, buying a home becomes less stressful.
2. Work on Your Credit Score
The credit score is another important factor considered by mortgage lenders. Credit score report indicates your creditworthiness, helping the lenders to make a decision on how much to lend you, and at what interest rate. Thus, a good credit score is vital in that it helps to ensure you are able to afford the home and at a fair interest rate. If the mortgage borrower has a poor credit score, mortgage lenders may deny him or her, access to the home loan. However, when the credit score is high enough, the mortgage lenders will be after the mortgage borrower. Thus, request for the credit score report from the credit bureau and check for any erroneous entries. If the credit score is not as good, come up with a credit repair plan.
3. Work with a Reputable Mortgage Brokers
The mortgage industry comprises of individuals and companies who help people to access home loans. The mortgage brokers act as intermediaries between the borrower and the mortgage lender. The brokers play a very important role in helping the borrower to identify the best lenders. In addition, a mortgage broker helps the borrower to negotiate for cheaper interest rates. Therefore, for a first time homebuyer who has no knowledge of the lending landscape, it is advisable that you work with a reputable mortgage broker.
4. Research Different Homebuyer Assistance Programs
Utah housing first-time homebuyer programs are structured to ensure affordable homes for millions of Americans who qualify Thus, you may want to research the different homebuyer programs available in Utah. to begin with, look out for the Utah housing down payment assistance programs. Here are some good examples you may be interested in:
- VA Home loan: guaranteed by the Department of Veteran Affairs, these homebuyer programs do not require mortgage down payment. However, they are available to qualifying veterans, service members, and their spouses.
- USDA Home Loan: Sponsored by the Federal Government through the US Department of Agriculture, the USA home loans require no down payment. However, to qualify you must be willing to purchase a home within the specified rural areas.
- FHA Home Loan: Sponsored by the Federal Housing Administration, this is a low down payment home loan. The borrower is expected to pay at least 3.5% down payment
The above home assistance programs are available through different mortgage lenders. Talk to an experienced mortgage broker for information on how to apply for either of the above programs.
5. Get a Mortgage Preapproval letter
Before you begin searching for a home, it is recommended that you approach a mortgage lender and request for the mortgage preapproval letter. The mortgage preapproval letter indicates the amount that you qualify to borrow from a particular lender. Thus, you are in a position to begin searching for a home, as you already know how much you can afford.
6. Budgeting for a home
When buying a home, it is important you first determine how much you can afford. Examine your current expenses and see which ones you can strikeout. Now, calculate your total income, and deduct the expenses to see how much you can commit as monthly mortgage repayments. Ensure that you have set aside an emergency fund to avoid life frustrations when repaying the mortgage.
7. Stick To your Budget
The mortgage lender may have preapproved you for an amount that way beyond your budget. Do not be tempted to go outside the budget, unless you have additional income or you can strike out additional expenses to cater for the monthly mortgage repayments. Otherwise, you may end up struggling to repay the mortgage.
Conclusion
We have looked at the important tips to help the first time homebuyer through the process of buying a home. Always remember to work with an experienced realtor to help you through the process of searching for a home.