Tips Every Homebuyer Should Know
Buying a home is the single largest investment that most people will make in their lifetime. So, it is important to take an honest look at your budget to make sure you are fully prepared to buy a home.
Today, there are more obstacles to getting a mortgage, including higher credit score standards and closer reviews of applications. Preparation is key to navigating today’s market.
- Review your finances. A thorough analysis of your financial situation is central to the decision to buy. Calculate all of your monthly obligations like car payments, credit card debt and living expenses, in addition to your potential mortgage payment, homeowner’s insurance, taxes and condo fees. Aim to keep the mortgage payment and all other obligations below 40 percent of your monthly income and stay within your budget when considering homes.
- Check your credit score. Your credit history is an important factor when applying for a loan. The score reflects how well you manage your debt and is calculated using data from your credit report. A lower credit score will result in a higher interest rate on your loan. If your score is too low, you may not be approved for a loan at that time. There are a number of steps you can take to improve your credit score, including paying your bills on time, only opening lines of credit you need and keeping your credit card balances below half of your available credit.
- Organize your finances before you go to the bank. Getting a loan requires a few different documents including, but not limited to, pay stubs, tax returns and bank statements.
- Factor in closing costs. Once you have found a home within your budget and agreed on a purchase price, there will be costs associated with closing the sale. These costs include appraisal, title work and bank origination fee. By law, lenders are required to give you a written estimate of closing costs within three days of accepting your loan full application.
At First National Bank, we are here to help make your dream home a reality. We offer flexible mortgage loan options and personal services to you, our neighbors and friends. You can count on First National Bank for competitive interest rates and some of the lowest closing costs around. Click here to learn more about our mortgage services or to contact a mortgage lender today.