Without the right knowledge, starting the mortgage process can seem intimidating. Here are five things to consider if you are a first-time home buyer taking out a mortgage.
1. Know your finances and debts. Consider creating a log or spreadsheet that shows how much money you make every month against how much money you spend each month. Use your income and expenses as a guide to see what a potential monthly mortgage payment would do to your monthly budget.
2. Consider the costs of home ownership. In addition to your mortgage, insurance and taxes, you will have home ownership expenses. Unexpected maintenance costs for your home’s systems and appliances can be an expensive surprise if you don’t consider them before you buy a home. Consider a home warranty to protect your budget. It can greatly reduce your costs when your major systems and appliances break down from routine use.
3. Monitor your credit. The better your credit, the more likely you are to get mortgage terms you like. The best place to start improving your credit is knowing where you stand. You can request a free credit report annually to help monitor your credit. If you find any issues, work to address them before applying for a mortgage.
4. Research financial programs. Qualifying military members can get lower interest rates and may be required to put little or no money down through a VA loan. FHA loans can help buyers with lower credit scores and may let them put as little as 3.5% down.
5. Put as much toward a down payment as you can. If you can put down 20% or more, do it. It will save you money in interest and PMI payments over the long haul. It also reduces your monthly mortgage payment. Putting down as much money as possible while still having an emergency fund is a strong strategy.
The Sally Awad Group is here to help you during all steps of the home buying process, including finding the perfect mortgage lender. Let’s talk and see what is best for you and your family’s needs!