You’ve decided it’s time to buy your first house.
Deciding that it is the time to buy is only the first step in the long journey to homeownership. Before you can you start shopping for your dream home, you’ll need to be aware of the factors that influence what you can buy and how you can buy it. Low interest rates make now an attractive time for first-timers to access their dream home, but you need to be fully prepared for every step of the process to make sure you find the right option for your situation. These helpful tips will start you off on the right foot.
Review Your Credit Report
One of the first things that lenders are going to look at when reviewing your financial picture is your credit score. These are designed to allow creditors to get a relatively quick idea of what your current financial status is and how you have handled obligations to other creditors in the past. Credit scores are comprised of a number of factors including how long of a credit history you have, what kind of debt-to-credit ratio you carry, and whether you have a habit of missing or late payments.
Reviewing your credit report before shopping for a home is important to understand what kinds of mortgage terms you will be eligible for, but also to ensure that there are no errors in the report that are contributing to a lower score. Request your annual credit report (legally you get one free one a year) and make sure that everything in it is accurate.
Improve Your Credit And Financial Situation
Once you know what your financial picture is, take steps to improve it if needed. It is better for you to wait on buying a home until your situation is more appealing to lenders than to take a loan that ends up putting more weight on already-strained finances.
If your credit score is low because you have missed payments, you’ll have to work to build it back up. However, this is in yours and the lender’s best interest because you won’t find it any easier to make payments with the additional burden of your mortgage. Paying off your obligations, lowering your debt amounts, and putting some money away for savings is a far more prudent decision.
Shop Around For The Best Home Loan Rates And Terms
Mortgage rates are currently low, but you’ll want to know the options available to you. There are a number of initiatives for first-time homebuyers, like FHA loans, that can come with even lower interest rates and smaller down payments, but you’ll need to have the right financial status to qualify for them. Before you even start looking for a home, you’ll want to know the loan terms that are sustainable for you, so apply to get preapproved to make sure you make the right financial move.
Don’t hesitate to take advantage of low rates, and contact us today to learn about our loan options.