mortgage tips

Expert mortgage tips to guide you with your money.

Shop Around as a First Time Home Buyer

Even first time home buyers should be choosy! As you begin your search, make a list of everything that is important to you in a home, and stick to it. Don't give in to the temptation to make an offer on the first home or condo that you visit. Spend some time looking around at a variety of homes that fit your criteria, and make sure that you select the home that is going to be the best fit for you and your needs.

It can be very stressful to purchase your first home, but by taking the time to prepare yourself with a good real estate agent, good mortgage, and a list of everything that is important to you, you'll be able to narrow down your choices and find the house that is perfect for your starter home.

Obtaining Your First Mortgage

Once you are ready to start shopping for your first home, be sure you become knowledgeable on the entire home buying process, know your options and don't rely on the advice of your well-meaning friends and family. There are many special government mortgage programs for first time home buyers, with low interest rates, and low down payments, and the more educated you become on the process, the more options you'll be able to explore to save yourself time and money.

If time is of the essence, look into online mortgage brokers, as they specialize in extremely fast turnaround on your mortgage options and closings.

Before you begin your house hunting, it's a good idea to get a pre-approval for a mortgage. This is because most sellers demand a pre-approval letter before they accept the offer you make on the home, and it helps the first time home buyer understand how much house they can afford to buy. This will narrow your choices down considerably as well, making it easier to find that dream home within your budget.

Finding First Time Home Loans

If you're still renting because you think it's difficult to get a first time home mortgage, you're missing out on an opportunity to buy and own your own home! Check into online mortgage brokers, or visit a local mortgage broker to get a consultation. Mortgage brokers will coach you on what you need to do in order to get approved for a mortgage if you aren't able to obtain a first time home loan right now, and their advice can help you get your finances in order.

As you are meeting with your mortgage broker, as them what types of programs you qualify for. They'll work with you to find you the best programs if you are loyal to them. Mortgage brokers can access your credit score, analyze your financial history and determine what you can afford. With this information, you can begin looking at properties that you will actually be able to afford, saving much time and disappointment if you should find your “dream home” at a much higher price than you could afford.

Low Down Payments for First Time Home Buyers

Many first time home buyers fear that they'll need to come up with huge down payments when buying their first home. However, there are many programs that are specifically designed for first time home buyers, and require little to no money down.

The federal government even allows for a one time withdrawal of up to $10,000 from an IRA or retirement account- and at no penalty if it is used for a first time home purchase.

If you develop a relationship with you mortgage broker, they can help you weed through the various mortgage programs available. There are so many that it becomes difficult to decide, and as a first time home buyer you can really benefit from a mortgage broker who explains all of your options to you thoroughly.

Enjoying Your First Time Home Buying Experience

You can make the most out of your first time home buying experience by learning and enjoying the process. Learn about your neighborhood, the school systems, average home values, and how much the home values have increased over the last five years. Take the time to assess crime rates and find out if anything is happening in terms of home or town development that will increase or decrease the value of your home in the future. Educate yourself on the various mortgage programs. Learn about first time home buyer options. Develop strong relationships with mortgage brokers and real estate agents to easily navigate through any future home buying you may do!

Top 3 Reasons to Use a Real Estate Agent When Buying Your First Home

There are many reasons why a first time home buyer should make use of a real estate agent. Their experience and professional knowledge will help you find your dream home, and prevent you from settling for a home that you don't really like. Here are the top 3 Reasons why a first time home buyer should use a real estate agent:

  1. Negotiation Skills - Real estate agents are in the business of negotiation. They represent their clients (home buyers) in negotiating the home price, as well as anything that needs to be addressed after the inspection of the home and the closing. Real estate agents have an impact on every aspect buying a home, and can result in saving thousands of dollars.
  2. Experience - Buying your first home is intimidating, having the experience of knowledgeable real estate agents will walk you through the entire process and help you with learning about neighborhoods, and school systems. Best of all, real estate agents are privy to knowing about the markets and get property information as soon as they are placed on the market.
  3. Resources - Real estate agents have referrals for home inspectors, attorneys, appraisers and mortgage brokers and can help you make contact with all of them. You may be able to find better mortgage rates online, but it doesn't hurt to check into your real estate agent's network, and explore all of your options.

Flexible First Time Home Loans

What should you look for in a mortgage program when buying your first home?

  1. Flexibility - Your mortgage broker will determine how much you can afford each month, but if the figure seems high, be honest with your broker. Mortgage brokers can suggest three or five year adjustable rate mortgages, or an interest only loan to get you into your new home without huge mortgage payments.
  2. Building Better Credit - Not everyone has perfect credit, and your mortgage broker will most likely be able to find you a program that will help you improve your credit. The payments may be flexible and often, if you make payments on time, your interest rate may be reduced.
  3. Long Term Goal - Consider whether you are planning to stay in this home forever, or only for three years, or for five years. Communicate with your lender your goals because it may help determine the best mortgage options from which you can choose.

Refinancing Your First Home Mortgage for a Better Rate

First time home buyers aren't always able to get the best rates. If your credit needed rebuilding, or you didn't have twenty percent down, you may have obtained a mortgage with terms you aren't happy with. After you've been in the house for a few years and have built up home equity, you can refinance to get better rates.

Refinancing a home mortgage is easy and painless, particularly if you use the same mortgage broker you worked with when buying the home in the first place. The process requires an application, another home appraisal and many of the same financial documents you provided when buying the home originally, but the closing and processing of everything goes much faster.

Ask your mortgage broker about refinancing options. You can probably save some money on your monthly payments and maybe even pull some of the equity you have to pay off a credit card debt or repair something in your home!

Interest Only Mortgages

Interest only mortgages are becoming popular with first time home buyers. Interest only mortgages have flexibility in repayment terms for the first several years of the home loan. When you make payments to your interest only loan, you are actually only making payments on the interest of your loan not the principal amount, so the payment is much lower. You can make payments towards the principle if you are financially able, but you aren't required to.

You need to take care when choosing an interest only loan. It's easy to get a more expensive house than what you can actually afford- be sure you understand that eventually your loan payments will change to include principal payment as well as interest!

Doing It Right: First Time Home Buying

Don't be tempted into buying a home that is too expensive for you when first time home buying. A real estate agent may show you homes that are really more than you can afford comfortably, and you need to stay within your budget and not make offers on the homes you can't really afford to live in. Below are some tips to buying a home you can afford.

  • To determine how much you can actually afford, start with what you pay now for renting. Could you afford to pay more? Do you need to pay less than that amount? Remember that a mortgage payment will include taxes, and home owners insurance.
  • Consider where you want to live? You may not get exactly the home you want as a first time home buyer, but you should be armed with information about neighborhoods, school districts and anything else that is important to you.
  • Don't get a mortgage that is too expensive, has a high interest rate or that penalizes you for making a prepayment Make sure you are using a reputable mortgage broker, and you should not have much difficulty.