7 Important Tips for the First Time Home Buyer
As you get started on your journey to finding the perfect home, Here are 7 really important things that will make your life so much easier with the home loan process.
- Stay on time with all of your bills in the last 12 months or more. If you do have a few dings “LATES” in the last 12 months, it is still possible to get a home loan, but you will have some explaining to do… and you may pay a little higher interest rate. Just a thought, if you have multiple lates on your credit it may be a sign that you need to get things under control before home shopping.
- You will want to have at least 3 good "trade" lines of credit - It can be a car loan, credit cards (secured or unsecured) , Gas Cards, Department Store Cards, Cell Phones. If you don’t have ANY debt or credit, you will find it more difficult to get a home loan. Having debt and showing the ability to pay on a month to month basis = being responsible and just what the lenders want to see before approving your home loan.
- START SAVING - Make a goal of saving at least 5% of the purchase price of the home you have your eyes on. We do have programs for less of a down payment (starting at 3% or even 0% for VA or USDA), but the more money you can put down on your new home, the lower your monthly payments and interest rate. Be nice to your relatives, you can also get gift funds to help in your quest for a nice down payment!
- BE CAREFUL WITH LARGE DEPOSITS you make into your checking and savings accounts. If the underwriter looking at your loan thinks you have just accepted an informal loan, you may have some explaining to do. (Gifts are OK – See #3)
- REALISTIC MONTHLY PAYMENT - Have a general idea of what monthly payment you are comfortable with and discuss it with your lender. (Example 20-30% of your gross monthly income). Some lenders and realtors will want to see what you qualify for at the highest possible loan. The allure of the bigger home can be intoxicating, but be careful you don’t take on too much mortgage debt = stress. You want to enjoy your new home and some extra cash to shop at Home Depot for all the fun new home toys.!
- Talk to at least a couple of local mortgage lenders as their rates and fees can vary, but tell them what you are doing. It’s not a secret, be direct and that honesty will help you build trust with them. Getting a loan is a process. You want to work with someone you feel comfortable with.
- Choose a competent real estate agent, not always a friend, or relative. It may be easier to look at them during a Holiday dinner, but they should be experienced in the business, not just available and in need of some cash.
If you need help getting pre-approved for a home loan in California, Jackie and her local team at Right Choice Mortgage have many programs to help the First Time Home Buyer and we make the process simple and easy to understand.
Give Jackie a call today (949) 600-0944