When it comes to the housing market it can be very intimidating to the first home buyer. This is the largest purchase that a person will ever make, so it is important to approach this process responsibly. The first home buyer needs to understand the entire process before they even begin their search. He or she also needs to complete a few steps before they even look at their first house or approach their lending institution. While this can be a scary process for the first home buyer there are many ways to make this process as smooth as possible.
The first step to this process for anyone, but especially the first home buyer is to take a look at your finances. One of the easiest ways to determine the type of mortgage payment that you will be able to afford is to look at their rent payment. If the first home buyer can comfortably afford the rent they are currently paying, then this can be used as a guide to the type of mortgage that they will be able to afford. It is also important that the first home buyer combines the price of the mortgage, insurance, and property taxes to equal or be less than the rent they are currently paying.
The best way to make this determination is by using a mortgage calculator which is available free of charge online or at your local lending institution. Once the first home buyer has decided on their budget then it is time to check their credit. The credit score is one of the most important aspects to purchasing a home, and the higher the number the lower the interest rate that will be attached to the mortgage. The first home buyer will need a credit score of 700 or higher to be able to get the best interest rates available.
The last preparation work that will need to be done for the first home buyer is to ensure they have enough money in savings. This part of the process is sometimes overlooked, however it is very important. To look the most appealing to the lending institution a person needs to have a six to eight month emergency fund and a down payment of approximately ten to twenty percent of the purchase price of the home. While this may not be required by every lending institution it will make you more appealing as an applicant, because it will show that you are financially stable.
When it comes to the first home buyer there are many things to consider before you even contact a real estate agent, but with a little proper planning you will be ensured of finding a home you can afford and that you will be proud to call your own. Once all of the preparation work is complete then it is time to get pre-approved for your mortgage. This letter will give your real estate agent and any potential seller the confidence that you are serious about purchasing a new home. The final step is to start your home search and find you piece of the American dream.