The ABCs of Getting a Mortgage Loan for First-Timers

Posted on: 21 August 2019

Are you tired of renting the place where you live? Do you want to buy a house so that you can hang things on the walls or paint the walls different colors without worrying about angering a landlord? Many people dream of buying their own home, but not everyone is able to achieve that goal. In order to achieve that goal, it's important to start planning as soon as possible. Buying a home isn't something that can just happen on a whim. You'll need to do things like:

Check out current listings: Some people have an over-inflated sense of what various single-family homes are worth in an area. You may currently be discouraged because you think that you'll never be able to afford the type of house that you're hoping for. But if you were to check out current listings, you might find out that houses are actually tens or even hundreds of thousands of dollars cheaper than you thought. This is especially true if you decide to do something like installing a pool later instead of buying a home that already has a pool. Small things like this can allow you to get a house much sooner than you'd otherwise have expected.

Start setting aside money: Once you know roughly how much you're going to need to spend on any of the single-family homes that interest you, it's time to start setting aside money for a down payment. A good rule of thumb is that you're going to need about 20% of a house's listing price saved as a down payment on the home. With moving costs and various associated fees, it may be better to shoot for having 25-30% of a home's price in a savings account before you start shopping in earnest. You may qualify for programs that reduce the amount of money you need but it's still a good idea to have as much as you possibly can.

Check your credit: In order to buy a house, you're going to need to get a mortgage. In order to get a mortgage for any single-family homes, you're going to need a good credit score. There are a number of places online that will give you your credit report for free. From this, you'll be able to find out if there are any bills that do not belong. This may be a debt that you paid off but that hasn't been cleared from your report, an item that was mistakenly added, and so on. By getting these things off of your credit report, your score will go up and you'll be able to get a home more easily and with a better interest rate.