Thinking about buying your first home?
Buying a home should be an exciting experience but it can be overwhelming if you’re not prepared. Here a few helpful tips to remember when preparing to purchase your first home.
Consider which type of financing will be best for you. There are a few options, Conventional loan financing and FHA loan financing. Typically, for most Conventional loans, a 20% down payment is required. So, with that being said, it’s wise to start saving several months or even years before you begin your home search process. For instance, if you were purchasing a home for $100,000 then you would need to be able to put down a minimum of $20,000.
FHA is another type of loan. If you don’t have 20% to put down, this type of loan may be a good option for you. However, be mindful that you may be required to obtain private mortgage insurance (PMI). Why would you be required to carry PMI? If you don’t have enough money to put down up front, then PMI protects the lender if you are unable to pay your mortgage payment.
Keep your credit good!
A credit score of 620 is typically the lowest score banks/credit unions will consider in order to qualify you for a loan. Why is credit score important? Because it gives the bank assurance that the loan will be repaid. But wait… you benefit from a high credit score too! Typical interest rates run between 3-5%. To get the best rates, aim for a credit score of 720 or higher. Remember, the higher your credit score, the better your interest rate will be!
Have your heard of NACA? NACA is a program to assist first time homeowners with affordable loans. Typically, this program focuses on helping those with low to moderate income. If you are interested in learning more information about this financing program check out http://naca.com.
In conclusion, having a good plan for your finances, from what you’re spending to what you’re saving, and paying down debt, will help put you in the best financial position to get approved for a loan. As part of the loan approval process, you’ll get approved for a certain amount and that’s when the fun beings! We get to start looking at homes together!