Tips on Choosing the Right First-Time Home Buyer Mortgage

First Time Home Buyers

First-Time Home Buyers Guide

If you are about to own the first property of your life, then you should be extremely proud of yourself. This should be one of the most memorable achievements of your life. However, as first-time home buyers, you might also face a few challenges owing to the dearth of experience. This can be especially true in terms of financial decisions. For instance, you have to be very careful while you apply for a loan if you plan to finance the purchase with the help of a mortgage program.

Although there are plenty of first time home buyer programs in order to make your lives convenient, making the right choice is definitely not a cake walk when it comes to the home loans. So, here we have put together a few crucial tips that will help you choose one of the best loan options in your interest. Take a look.

  1. Undertake a Research

Houston offers you several kinds of mortgage programs for the first-time home buyers. Therefore, in order to ensure that you are making the correct choice of the loan program, you must conduct a thorough research in the market. Based on your requirement and budget, you should shortlist a few options that will help you find the perfect loan program, enabling you to enjoy maximum flexibility and optimum value.

Thankfully, taking a new mortgage or refinancing one is becoming easier and easier for aspiring homeowners. To guide you through a smooth and less stressful process, seek advice from mortgage brokers like Elementary Mortgage Solutions, which are capable of finding you the best possible mortgage deal that meets your property needs, budget, and time frame.

When looking for a mortgage broker to work with, take note of the following tips:

  • Ask the mortgage broker about their fees immediately. As an independent contractor, most mortgage brokers earn commission from their clients or homebuyers. Generally, the origination fees they charge are 1% of the mortgage amount. Say you’re taking out a loan priced at USD$300,000, this means that they’ll earn USD$3,000 for their role in securing your mortgage process.
  • Speak with a past client if possible. This way, you can ask for their testimonials and assess if it’s worth working with the broker in question. If the past client is dissatisfied with their services, you’ll immediately know why.
  • Discuss your chances of qualifying for a mortgage. Before starting your mortgage search, you’ll want to inform your mortgage broker regarding the state of your finances. If you have financial issues that can hinder your application, such as unemployment, high debt, or income issues, it’s paramount to let your broker know about this to avoid potential problems in the future.
  • Communicate with your broker openly. Establishing clear communication with your broker is one of the keys to successful loan processing. Therefore, explain your financial situation to your lender to allow them to establish your borrowing needs. By knowing your needs and capabilities, they can recommend loans that suit you best.
  1. Decide on Your Budget

Now that you have a few options in mind, you should take a quick sneak-peek into your wallets and make sure that you will be able to afford all those loan programs you have enlisted in your mind. You should choose the mortgage options which you can pay back again quite comfortably without having to curtail your lifestyle. Seriously consider your budget because otherwise, you are running the risk of becoming a defaulter in the end. If you see that some of the loan programs are out of reach, strike them off from the list and work with the options left.

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  1. Compare the Interest Rates

Now another thing that you must realize is that you might have a generous budget to spend but why would you spend more when you can avail loans at lesser interests? As you must be aware that home loans are available at various rates, you should not make the mistake of blindly choosing the first option that comes before you without comparing the rates first. You should compare the rates in the markets and then choose the one that offers you the lowest rate of interest.

  1. Consider the Down Payment

No matter which kind of loan you choose, you have to make a down payment. Therefore, you should include the down payment and then prepare the budget. Moreover, if you are trying to reduce the rate of interest for these loans, you can choose to make a higher down payment. Lenders often charge lower rates of interest from those who make a higher down payment.

  1. Maintain a Good Credit History

Next, you must focus on qualifying for the loan program you have in your mind. There are several kinds of mortgage programs with some sort of eligibility criteria. And your credit score is one of the most crucial factors that will determine your eligibility for a certain mortgage program. If you have a greater credit score, you can choose from a number of loan programs. However, there are also FHA loans for bad credit that you can avail but it is better that first, you should try to maintain a good credit history record.

      6. Know the Approximate Closing Cost

If you are planning your finances in order to purchase the new house, then you should also consider the closing costs in your budget. Closing costs have a significant role to play in your mortgage, running between 2 to 5% of the total loan amount. You can test the market closing costs beforehand by comparing the closing expenses including home inspections, title searches, or home insurance. You may be able to defray the costs by negotiating with your real estate agent’s commission or by requesting the seller to provide for a certain share of the total closing cost. Knowing an approximate amount of the closing costs will help you set your budget accordingly.

So, hopefully, now it will be easier for you to choose the right mortgage option for your home. If you need further guidance and useful advice for the first-time home buyer loans, you should resort to experienced and reputed lending service companies near you.

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About Joan Gallardo 1 Article
Joan Gallardo has an experience of 15+ years as Senior Loan Officer in Houston, he has shared tips on choosing the right first time home buyers programs. Follow his blogs to know about VA loans, FHA loans for bad credit etc.

1 Comment

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