8 Mortgage Tips for First Time Home Buyers

Posted by wadmin on Thursday, January 24, 2019

Stone Bridge Mortgage Group_8 Mortgage Tips for First Time Home Buyers_01

The process of shopping for a home and getting your first mortgage can seem like a daunting task. As with many things in life, however, the process becomes easier when you arm yourself with good knowledge. For those looking to buy a home for the first time, here are eight mortgage tips to know.

1. Know your credit score and what it means for your mortgage.

Your credit score will determine not only how much you can afford to put towards a home, but how much interest you’ll end up paying over the course of your mortgage. For example, with a FICO score of 750 and a $200,000 mortgage, you can expect to pay around $158,849 interest over a 30-year mortgage. If your score is 650, you can expect to pay over $35,000 more. You can use MyFICO.com’s calculator to determine the cost of your credit score.

2. Estimate how much you can borrow.

Generally speaking, your monthly housing payment, including taxes and insurance, should be no more than 28% of your pre-tax income, and your total debt, including your mortgage payment, should be no more than 36%. When helping to figure out how much you can borrow, lenders will use the ratio that produces the lower payment.

3. Don’t overextend yourself.

Just because you can do something doesn’t mean you should. For example, even if you own a credit card with a $20, 000 limit, you probably shouldn’t spend that much on that card. Try not to max out your budget with your mortgage payments. Stay within your budget.

4. Get your documentation in order.

There is a lot of paperwork involved in applying for a mortgage. Make sure you have everything in order before going to the lender’s office. You’ll need documentation to support your income, employment situation, and identity. You’ll need at least your last couple of years of tax returns, bank and brokerage statements, pay stubs, W-2s, your driver’s license, Social Security card, marriage license (if applicable), and contact numbers for your employer’s HR department. Look here for a more comprehensive list of documents you may need to bring with you to fill out your mortgage application.

5. Before you start shopping, get a mortgage pre-approval first.

Although you don’t need a pre-approval to start looking for houses, having a pre-approval can be a valuable shopping tool. Submitting a pre-approval along with your offer can let the seller know that you are serious about buying, and that you’re not likely to have difficulty obtaining financing. It is important to note, though, that a pre-approval and pre-qualification aren’t the same thing. Because a pre-qualification is based solely on information you provide, it does not carry as much weight as a pre-approval.

6. Figure out how much you want to put towards a down payment.

While it is true that you may qualify for a lower down payment with certain loan types, remember that the higher your down payment the lower your monthly housing costs. The standard for a down payment is 20%, but you can go as low as 3% with the right loan qualifications. Determine if it is best for you to save more for a larger down payment before completing any deals.

7. Closing costs don’t have to come out of your pocket.

Closing costs typically make up between 2%-3% of the principal amount on your mortgage. This means that on a $200,000 mortgage, closing costs can add up to about $6,000 – a sum that must be paid when you get the keys. However, you can negotiate to work seller-paid closing costs into your offer. For example, if you want to offer $195,000 on a home, you can offer $200,000 and ask the seller to pay up to $5,000 in closing costs for you. This can save first time home buyers a substantial out-of-pocket expense.

8. If your credit history isn’t great, consider an FHA loan.

A minimum credit score of 620 is what is typically required to qualify for a conventional mortgage. However, if your credit history isn’t the best, you may still be able to qualify for an FHA loan. FHA loans are designed for borrowers with qualifications that don’t meet the standards of conventional lenders. While they can be significantly more expensive, they are a great resource for those who otherwise wouldn’t be able to qualify for a mortgage.

For professional assistance with your mortgage, look no further than Stonebridge Mortgage Group. You can rely on Stonebridge Mortgage Group to help guide you through the home buying process. We help get you pre-approved for a mortgage and help with your real estate loans and other mortgage solutions, both residential and commercial. Stonebridge Mortgage Group serves the greater Portland area and are in Gresham, Oregon. Don’t wait to get personable and professional advice when it comes to buying your first home!

 

Call us today at 503.661.5580

 

Categories: Down Payment, FIrst Time Home Buyer, Home Buying Tips, home loans, mortgage broker, Mortgage Lenders, mortgage loans, mortgage payments, Mortgage Tips, Pre-Approval, real estate loans

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