Tips for First-Time Home Buyers Looking for Financing

First-time homebuyers have many options in terms of financing. A Montgomery OH first home loan is easy to come by if you have a good credit score and the income to support the purchase of a new home, but there might be a few things you don’t know about first-time buying. Before you apply for a loan and buy your first home, take a moment to learn a few helpful facts about the first-time home buying process. 

Check Your Credit Score First 

Do not apply for a loan until you check your credit. You might think you know what your score is, but you have no idea if there are mistakes on your report. The people who input information on your credit report are not perfect, which means they often make mistakes. You could have an incorrect entry, wrong information, or even someone else’s debt on your report. Check your report to see if there are mistakes. 

If there are mistakes, dispute them right away with the credit bureau. Even a small mistake can make a significant difference to your score. Correcting the mistake can raise your score, and even a few extra points can make the difference between a good interest rate and one that’s higher. 

Know What You Can Afford 

You must get pre-approved for a mortgage for several reasons. The first reason is to know what you can afford. You might think you can afford so much house, but the bank might tell you differently based on your debt-to-income ratio. Additionally, it’s important you understand you cannot always afford to buy as much house as the bank says you can afford. You have maintenance, utilities, and other household expenses to pay for now, and those aren’t cheap. 

The second reason is that many sellers don’t entertain offers from buyers without a preapproval. They’d rather accept an offer from someone who has already spoken with a lender, and they want to know their buyers have the funds to pay for the home. Sellers want a sure-thing, and a buyer with a pre-approval seems like a serious contender. 

Find the Right Loan 

The right loan might not be what you expect. If you’re a first-time buyer, you might qualify for special loan programs that allow you to buy a home without a traditional mortgage. FHA loans are great for you if you have a lower income and want a home. There are home loans specifically created for you if you’re buying outside of your city limits. There are loans that allow you to forgo making a full 20% down payment while avoiding the added cost of private mortgage insurance. 

Ask your lender to discuss potential loan options for you and look for the one that best fits your needs and your budget. Once you realize you have options, you might find shopping for a home is less stressful. First-time buyers are given options, and you want to take advantage of what’s out there for you.

 

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