Tuesday, 7 March 2017

Things that First Time Homebuyers Should Consider Seriously

Although, the mortgage rates are amazingly lower, buying a home can be a nerve wrecking process for the first-time homebuyers. The reason is that they find it difficult to understand what to expect.

With that said, we are going to mention some tips that may make the process easier for such buyers.

The credit

When it comes to qualifying for the mortgage, the first thing that you should take into consideration is your credit score.

Mike Winesburg, who is the former mortgage planner with McKinley Carter Wealth Services in Wheeling, says, “In addition, the standards are higher in terms of what score you need and how it affects the cost of the loan.”

It would be worth mentioning here that just because you pay everything on time doesn’t mean your credit score would be satisfactory. The usage credit as compared to the credit limit, also referred to as credit utilization ratio, is also the factor that matters considerably.

The lower is your credit utilization ratio; the higher would be your credit score.

So, if you find out that your credit score is not in good shape, repair it and maintain its good record for at least six months before you consider buying a home.

The evaluation of assets and liabilities

The good understanding about money that you owe and your income is one of the major requirements if you want to buy a home. As Winesburg says, “If I were a first-time homebuyer and I wanted to do everything right, I would probably try to track my spending for a couple of months to see where my money was going.”

This process also involves getting familiar with the process of mortgage lending in order to know how lender would view your income.

For example, the self-employed persons often find it very difficult to qualify for a loan because usually have a record of inconsistent income.

Organize your documents

The records of your income and taxes are the most important documents t show when it comes to qualifying for mortgage loans. Normally, the money lenders would ask you to show the records of years’ W-2s, tax returns and a two-month record of bank statements. The lenders would ask you to submit every single page of these two records.

Floyd Walters, the owner of BWA Mortgage, says, “Why it has to be every single last page, I don’t know. But that is what they want to see. I think they look for nonsufficient funds or odd money in or out.”

Be qualified for the loan
Although the lender would tell you whether or not you qualify for the mortgage, you may already know how much you can afford to pay on monthly basis. Nevertheless, it’s a standard procedure and you must qualify for it if you want the entire process to be smoother.

By taking into consideration your debt-to-income ratio and the upfront payment you need to make, you can have better idea about your affordability on overall basis.

Get a knowhow about the down payment
Once you will have an idea about the down payment that you need to make, there are several programs you can get help from. These programs would provide you loan for making down payment in order to start regular mortgage process. The interesting thing about many of these programs is that they provide interest-free loans, making the repayment quite easier.

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