How to Get a Great First Mortgage

mortgageIt is part of the American dream to own your own home. Most people feel a huge accomplishment in buying a home of their own. There are several advantages to buying a new home vs. renting a home. The first being Equity. Equity is established every month with your monthly mortgage payment. Instead of just paying rent you are putting equity in your home and investing in your future. Secondly, there is a tax benefit to owning a home. When owning your own home your mortgage interest and property taxes are tax deductible. Your accountant will help you with details and advise. Last, you are building credit. Make all mortgage payments on time and this will improve your credit history.

Mortgage companies have special programs made especially for the first time home buyer. Some are private programs and some companies even have government programs. If you can put very little money down on your home an FHA loan is probably the right program for you. It allows for gifts and grants as down payment or for closing cost. The mortgage rates are good and fees are low. If you can get approved for an FHA loan they are usually the best suited for first time homeowners. The rate is low and there are many restrictions on banks and mortgage companies so they cannot charge you too much in fees.

Buying a new home can be a stressful time for most, but if you do your research and make sure you have all your documents needed to get a mortgage and it should make it a lot easier on you. Your mortgage company will pull a credit report on you. You will have to provide income documentation, assets, information on the home your buying, insurance company information etc…

When you have decided to buy a home there are a few things you need to do:

Make sure your credit is good:

  • Do not open any new credit cards or buy any large items prior to buying your home
  • Pay all credit cards and bills on time

Make sure you know what you can afford:

  • Look at your DTI. This is your debt to income ratio
  • Mortgage companies rely a lot on this ratio

Make sure you have the money:

  • Assets are also a huge part of receiving a mortgage loan
  • You need to have at least 5% to put down unless you can qualify for an FHA loan which will only require 3%
  • You will also need money for closing cost and most loans are going to require a certain amount of money in reserve (most require 3 months)

Purchasing a home is one of the most satisfying things you will do in life, so be sure to take it serious and listen to your mortgage adviser. Happy Hunting!

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