After 10 years of marriage, I’m still enjoying living in the first home I moved into with my husband. Buying a first home can be one of the most exciting events in a person’s life. Before making this important expenditure, people need to first sit down and determine how they will successfully finance it. After all, a home will likely be the most expensive purchase you make in your life. Talk to a loan officer and determine how much money you can reasonably borrow. Then, decide how much money you want to use as a down payment. You also must decide how many years you will finance your home for. On this blog, you will learn about the process of buying a first home with a loan.
When you are thinking about buying your first home, you may be wondering what you can and should do to get a mortgage and to get the best rates for a mortgage in your area. Because you have never had or applied for a mortgage before, this is an unfamiliar and confusing situation. However, there are steps to take to ensure you get the best deal and find yourself a house that is perfect for you. Get to know some of the steps that you should take before you really begin trying to get a home mortgage.
Know Your Credit Score And Credit Report Information
The first step that you should take to find out whether or not you will be able to get a good deal on your future mortgage is to find out your credit score. If you do not regularly track your credit report and score using your bank or another service, there are some ways to determine your FICO credit report for free once a year. There are also separate services that will give you free access to your credit score.
Accessing your annual credit report is as easy as entering in your identifying information and answering some verification questions. Then, you will be given access to your full credit report. You will see current and past credit accounts that you have had including their standings and if there have been missed or late payments on those accounts that were reported.
Be sure to look through your credit report very carefully to determine whether or not there are any mistakes. Additionally, if you have accounts in poor standing, you will want to contact them and determine ways that you can bring the account current again.
Reduce Your Debt-To-Income Ratio
Once you have looked over your credit report, you will have a good idea of how much debt you have total. You will also be able to add together your monthly payments for your debts. Ideally, you will want to keep your debt-to-income ratio around a quarter or slightly more of your monthly income. The lower the debt payments you pay every month, the more discretionary income you have.
A mortgage lender will see this extra amount of money as a positive in a few ways. Extra discretionary income is an opportunity for you to build savings that can be used to pay your bills should any extreme circumstances arise. Your discretionary income is also a monthly cushion that will ensure that you will not miss mortgage payments due to lack of funds on a monthly basis. The larger the cushion of discretionary income, the more secure the bank or other lender will feel in offering you a mortgage. This means you will likely get approved for a larger mortgage and/or get lower interest rates. So, if your debt-to-income ratio is high, try to pay down some of your higher balances before you apply for the mortgage.
For more information, contact Doolin Security Savings Bank or a similar organization.