When it comes time to buy your first home, the process can be both exciting and scary. While it is always fun to search for that perfect home, it is also important to keep in mind just how much money you will be able to spend when buying your home. Since you will be needing a mortgage to finance your purchase, it is crucial you have a good understanding of the mortgage loan process. Otherwise, you will likely make numerous unnecessary mistakes that could end up costing you thousands of dollars over the course of your loan. If you are preparing to get a mortgage loan to make your home purchase, here are some important tips to keep in mind.
Get Pre-Approved Before Finding a Home
If you want to be one of the smartest home buyers around, always get pre-approved for a mortgage before beginning your home search. By doing so, you will know exactly how much money you can spend on your home search. This will be extremely beneficial, since it will prevent you from falling in love with a home you later realize you cannot afford. Also, being pre-approved will likely keep you from stretching your budget to the point that you get in over your head with too much debt.
Visit Multiple Lenders
If you want to get the best deal on a mortgage, always be sure you visit multiple lenders. By doing so, you will be able to compare offers and make the best selection for your needs. Also, once you have an offer in hand from one lender, you may be able to use this as leverage with other lenders to get a better deal. To make sure you ultimately receive the best possible mortgage, experts recommend you visit at least three different lenders. Along with comparing rates, loan terms, and fees, also take into consideration such things as customer service, which can be important should you have questions along the way.
Don’t Get in a Hurry
While you are of course anxious to purchase your first home, try not to rush the process. If you do, mistakes will be made. For example, by being in too much of a hurry to make a purchase, you may not leave yourself enough time to save up for an adequate down payment and closing costs, which can ultimately hinder your search for the best mortgage loan. To get the best results, map out a timeline for your home-buying process at least one year ahead of time. By taking this approach, you will be able to do things that will help in securing the best possible mortgage, such as checking your credit report, fixing any problems found on the report, and getting a clear vision as to the type of home you want to buy.
Don’t Use Your Entire Savings Account
While it is nice to save up 20 percent for a down payment that will exclude you from having to purchase mortgage insurance, doing so at the expense of using up your entire savings account could create other problems down the road. For example, if you use up your savings for a down payment and later find yourself in need of money for living expenses or other unexpected financial situations, you could be facing dire financial consequences. Therefore, even if you need to purchase mortgage insurance, it will be worth it to make sure you can hang on to your savings.
Consider VA, USDA, and FHA Loans
If you are cash-strapped and having trouble getting a conventional mortgage loan, consider looking at other types of loans from the VA, FHA, and USDA. With these loans, down payment requirements are far less, often being three percent or less. Along with this, these loans are geared to help low to moderate income home buyers, especially those who may have had past credit problems or other financial issues. By considering these options, you may be able to buy your dream home much quicker and easier than you imagined.
By keeping these tips in mind while searching for your perfect home and mortgage, you will not only save yourself a tremendous amount of unnecessary stress, but also plenty of money.