Find out about the process for getting a first time buyer mortgage and how to ensure that the process goes as smoothly as possible.
Tips for Getting a First Time Buyer Mortgage
Buying your first home is an exciting time in your life. For many, it makes them finally feel like an adult. The process of getting a mortgage takes a month or longer, so now is the time to make sure that you have everything set up for a smooth transaction.
Have Your Paperwork in Order
A first time buyer mortgage requires different types of documentation. You will need to have your Social Security card and other documents for identity verification. You will also need proof of your income. This could be your tax returns, electronic pay statements, or a letter from your employer on company letterhead. It is a good idea to get pre-approved for a mortgage in case you find a house you love. The sellers may be more willing to consider your offer if you are already pre-approved for a loan.
Check Your Credit Report
The bank will check your credit report in order to determine your risk as a borrower. At least six months before you plan to take out a first time buyer mortgage, check your credit report. If you find errors, contact the credit bureaus in writing. They have 90 days to fix it. You can get one free credit report from each bureau every year.
Start Saving Money
You have a better chance of securing a mortgage if you are able to make a large down payment. At least one year before you plan on buying a house, start saving money for the down payment. A 20 percent down payment puts you in a good place for securing a mortgage.
Know Your Budget
When you apply for a mortgage, know how much you can afford to borrow. Your housing costs should not be more than 30 percent of your take-home pay, but this could be higher or lower based on your personal circumstances. The total costs of your housing include your mortgage loan, homeowner’s insurance, and a fund for maintenance and repairs. Each year, you should set aside at least 1 percent of the home’s value for maintenance and repairs. If you borrow too much money for a mortgage, you might have trouble paying for an essential repair, such as a new furnace or replacement roof.
By following these tips, your application for a first time buyer mortgage should go smoothly.