How to Prepare for Your First Mortgage
You can help yourself transition into home ownership easier by preparing for your first mortgage. Setting savings goals, minding your credit score, getting pre approved, and knowing how much home you can afford will help you prepare for success.
As a new home owner you will definitely learn a few new things. There is no apartment supervisor to call for maintenance repairs. You will learn the difference between home owners insurance and a home warranty policy. Home ownership also comes with a greater financial responsibility in your investment.
These steps will help you prepare for your first mortgage transaction:
Set Saving Goals
Buying a new home requires a few upfront costs. You should save for the costs of moving, deep cleaning, furniture, appliances, and small repairs. Having savings for these expenses is smart, especially since you don’t want to use credit for large purchases during the mortgage process.
You will also need to save for the down payment on your home as you prepare for your first mortgage. A down payment can be 10-20% of the price of your home for a conventional mortgage. Low down payment mortgage options give you more financial flexibility at 3-5% down.
Use our “Down Payment Savings Plan” worksheet to help you prepare for your first mortgage.
Keep Your Credit Score in Mind
As you prepare for your first mortgage, you can not neglect your credit score. Buying a home is the biggest financial investment that most Americans will make in their lifetime. Financing a purchase of this size, requires proof that you are a responsible user of credit.
If your current FICO credit score is lower than 680, you will need to raise your score before applying for your first mortgage. Set a goal of raising your credit score to 740 or higher to gain access to the best mortgage rates and loan options.
Learn about strategies for “Cleaning Up Your Credit Before Home Buying” in this article.
Get Pre Approved
The best advice we can offer first time home buyers is to get pre approved for a mortgage loan before you even begin looking for a home to buy. Being prepared on the financial side of home buying is the best way begin.
Pre approval is FREE at TexasLending.com. Our mortgage experts have served as a guide to many home buyers, and are available to answer your mortgage questions at any time during the home buying process. Even if you are 6 months away from buying, we are ready talk to you and help you prepare for your first mortgage.
Know How Much Home You Can Afford
One of the biggest benefits of being pre approved for a mortgage loan, is that you will know the flexibility of your home buying budget. As you prepare for your first mortgage it is important to keep your actual budget in mind.
You may be able to estimate the monthly mortgage payment you can afford, based on your current budget for rent. Speaking with a licensed mortgage consultant about your income and current debt obligations will help you better understand your home buying budget.
As you prepare for your first mortgage, remember that there are variables in the rate and term of your loan that will effect you monthly payment. You learn more about, “How Much Home Your Can Afford” in this linked article. However, the best way to prepare for your first mortgage is to speak to a licensed loan officer about your specific financial and home buying goals.
We would love to help you prepare for your first mortgage, by answering all of your mortgage questions. Call and speak with our licensed mortgage consultants at 800-346-8047. Or you can submit a loan inquiry anytime on www.TexasLending.com.