4 Things a First-Time Buyer Should Know

If you’re considering a home purchase, here are four things you should know upfront to help you get started on the process:

1.      Focus on your Credit Score – Your credit score is a critical part of your mortgage approval, so you’ll want to have it reviewed early on in the process.  A person who isn’t credit readily initially can often change that with time.  Having a knowledgeable, qualified mortgage lender review your credit report is absolutely mandatory early on for any hopefully home buyer.

2.      It’s not WHAT you do, it’s THAT you do – buyers often worry that they can’t get a mortgage because they recently started a new job or finished school.  The old myth that you need to be on a job for 2 years to get a mortgage isn’t true.  Banks don’t care WHAT you’ve been doing for the last 2 years.  They care THAT you’ve been doing for the last 2 years.  Have you been employed in some form?  Have you been in school?  The mortgage lender will typically rely on your current income from your current job – even if you’ve only recently started it – as long as you can show them that you’ve been actively working or learning in some form for the last 2 years.

 3.      Try to have a Down Payment – Do you need to have a down payment to buy a home?  Probably not.  Most first time home buyers can qualify for a ‘no down payment’ option.  Even though these options are there, you should still try to save up a 5% down payment if you can.  Your closing costs will be cheaper, your interest rate will likely be lower and your monthly PMI will typically be less.

       4.      If you truly need down payment help, explore USDA – If saving up a down payment just isn’t going to work for you, explore USDA financing.   It offers 100% financing to eligible buyers, has good interest rates and very low PMI.  There is a financing fee that is rolled into your loan, so you’ll owe more when you pay the home off, but – on all other fronts – it’s a low cost 100% financing option.  The biggest drawback is that you can only use this loan type when buying a home in an area considered rural, but that area is larger than many think, so it’s worth exploring as you home shop.

Credit score, income and down payment are the three main things that a lender will focus on when approving your mortgage.  To learn more about these and other important aspects of home buying, visit www.SouthBendHomeLoan.com and www.youtube.com/SouthBendHomeLoan.