Are you buying a house for the first time? The house buying process can be nerve-wracking if you are new to it. Fortunately, we have put up a few pointers to assist you in getting through the process while saving money below:
Start Saving for the Down Payment
While it’s customary to put down 20%, many lenders now allow significantly less. Some programs allow as little as a 3% down payment. Keep in mind that putting down less money may result in more outstanding charges and the need to pay PMI (private mortgage insurance).
Setting aside tax refunds and job bonuses, setting up an automatic savings plan, and utilizing an app to track your progress are all good ways to save for a down payment.
Explore Your Options
There are numerous mortgage alternatives available, each with its own set of advantages and disadvantages. If you’re struggling to come up with a down payment, explore various options.
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Today's Mortgage RatesRemember that the amount you put down impacts your monthly mortgage payment and your interest rate. Choose a 30-year fixed mortgage if you want the lowest monthly price feasible. A 20-year or 15-year fixed loan, on the other hand, can offer a cheaper interest rate if you can afford more outstanding monthly payments.
Contact one of our home mortgage brokers to decide whether a 15-year or 30-year fixed mortgage is a better fit for you. On the other hand, an adjustable-rate mortgage is riskier but ensures a low interest rate for the first few years of your loan.
Determine How Much of a Home You Can Afford
You need to know what your budget can realistically buy before you start hunting for your dream home. Contact us for assistance in determining how much you can comfortably spend.
Check Your Credit Report and Avoid Taking Out Any Other Loans
Your credit score will play a role in determining whether or not you gain approval, as well as your interest rate and possibly loan terms.
If you haven’t done so previously, check your credit score before you start looking for a home. Dispute any errors that may lower it, and seek ways to boost it, such as paying down any outstanding obligations.
Avoid opening any new credit accounts, such as a credit card or an auto loan, until your home loan is closed to keep your credit score from dropping when you apply for a mortgage.
Make Sure to Compare Mortgage Rates
Getting a rate quote from only one lender is a common mistake made by first-time home purchasers. This frequently results in money being left on the table, and it’s why we provide our home purchasers with a variety of lenders to choose from.
When you’re comparing quotes, see whether any of the lenders would let you buy discount points, which allows you to pay interest upfront in exchange for a cheaper interest rate. Two significant criteria in assessing whether buying makes sense are how long you anticipate staying in the home and whether you have money on hand to acquire the points.
Get a Pre-Approval Letter
Another blunder made by first-time homebuyers is simply obtaining a pre-qualification letter. Based on your income and debts, this provides you an estimate of how much a lender could be ready to lend.
It’s far better to acquire a pre-approval, in which the lender thoroughly investigates your finances and verifies in writing how much and on what terms it’s willing to offer you. It gives you a lot more credibility than purchasers who haven’t gone through the process.
Stick to Your Budget
Even if you can technically afford your pre-approval amount, it’s a cap—and it doesn’t take into account other monthly expenses. To avoid a mortgage payment you can’t afford, always purchase with a definite budget in mind and adhere to it.
Are You Ready to Choose the Best Mortgage for You?
Purchasing a home is an exhausting process, but it’s gratifying in the end. If you’re getting ready to take the next step in your home buying journey, you’ll need to work with a qualified mortgage professional that can match you with the best loan and help you close on a home to call your own.
You can explore all of these alternatives by speaking with a home mortgage broker at MidAmerica Bancorp, Inc. Do not hesitate to reach out at (708) 237-4050 and ask as many questions as you need until you have a clear understanding of your mortgage alternatives.
Do you know how much home you can afford?
Most people don’t... Find out in 10 minutes.
Today's Mortgage Rates
