First time home buyers who have decided now is the time to buy their first home, getting your finances in order is an important first step.
Not only will the process go more smoothly, you’ll be moving in a lot quicker too.
According to TD Bank’s Mortgage Service Index, released in April, 69 percent of homebuyers find buying a home to be stressful, with about one-quarter of those surveyed describing home buying as “extremely” or “very stressful” and 45 percent classifying the process as “somewhat stressful.”
Related: 4 Steps to get you moved in quickly
Equifax one of the three major credit reporting bureaus, offered these 5 Tips for first time home buyers., A credit report is just one part of getting your first time home buyer loan, so I thought having a lender’s perspective would enhance the value of their article.
1. Order a copy of your credit report - While Equifax recommends that you order your report from annualcreditreport.com, doing so will only give you a cursory look at your credit and most importantly won’t include credit scores.
All most all first time home buyer loans have minimum credit score requirements. Having that information when you start will help you make the right choices when it comes to managing your credit.
Related: Did you know you have 49 credit scores?
2. Address any issues or discrepancies - You have a legal right to dispute inaccurate information on your credit report. You can dispute through Equifax, one of the other bureaus or with the creditor directly.
When you have a dispute on your credit report that trade line is not considered in your credit score calculation. Therefore mortgage lenders will require that the dispute be resolved so the trade line can be included in your credit score.
3. Figure out what you can afford - What you can afford and what you qualify for may be two different figures. Affordability is about the monthly payment on your home loan, not the actual sales price.
Decide how much of a monthly payment you would be comfortable making. Then sit down with a first time home buyer specialist, go over the various loan programs available and see which ones will get you the most bang for your buck.
4. Set a savings goal - When you meet with your first time home buyer specialist he/she will give you an estimate of how much it will take you to move in.
Meeting the “cash to close” requirement may involve some sacrifices to your daily lifestyle. Not only will you be accumulating your “skin in the game”, you’ll be preparing for the homeownership lifestyle.
Related: Test drive homeownership
5. Educate yourself on current lending guidelines, and collect all the information you need to present to a lender. Keeping up with current lending guidelines is an impossible task. As lenders we have trouble keeping up (changes averaged 1 per day in 2012). You can access the guidelines for most first time home buyer programs online, but it’s interpreting those guidelines that make the difference.
Related: Don't go from Approved to Not Approved
Getting a first time home buyer loan in today’s market requires discipline and patience and most importantly the help of your team of first time home buyer specialists.
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