A mortgage payment is one of the largest financial commitments you can make, so it's important to understand the process and how you can influence it. Avoid the many pitfalls confronted by first-time homeowners by following these 4 helpful tips.
1. Neglecting Your Credit
Before you apply for a mortgage, the first thing you need to do is check your credit. Your credit situation will determine if you are approved for a loan or not, and will set your interest rate. If you've got fair credit, you're not getting the best interest rates available, which can make you pay tens of thousands more dollars on your loan over time.
2. Failure To Season Your Assets
Underwriters take a close look at your assets, and where your money comes from. It would be best if you were able to show that you have long-term assets to help reinforce that you are capable of making the initial down payment, pay any closing costs, and regular payments after that.
3. Consider All Cost
Many first-time homebuyers forget that the expense of buying a home includes more than just paying the principal and interest. In addition to that, the costs of homeowner's insurance and property taxes must also be weighed. Be sure to consider these items as you assess the affordability of a home.
4. Don't Apply For More Credit
First-time homeowners should not only check their credit before applying for a home mortgage loan, but they should also be careful of applying for more credit during this process. Lenders will most likely pull your credit again before the loan closes, which could cause your deal to fall through if you've applied for additional credit.