Be An Informed First Time Home Buyer

Buying your first home is exhilarating, but it can be intimidating and scary. The biggest hurdle in becoming a homeowner is obtaining a mortgage to finance the house you wish to purchase. Finding the right mortgage takes time and effort, but you don't have to go it alone.

Work with your real estate broker. She or he should be knowledgeable about what mortgage loan programs are available, and whether you qualify for any government subsidized loan programs. Alternatively, work with a mortgage broker, whose job it is to find the mortgage that is right for you.

If at all possible get pre-qualified for that mortgage, that way you know how much you can spend. It is also helps smooth your chance of getting the home when there are multiple offers. Sellers hate uncertainty, and so, if you are ready to go with a loan approval, then you have that all important advantage when making your offer. Your broker may even recommend that you offer less because you already have loan approval.

Be prepared for lots and lots of paperwork. Ever since the credit meltdown last year, banks, credit unions, and other financial institutions that make mortgage loans have become much more demanding in terms of qualifying buyers. You'll need copies of your W-2s showing your annual income for the last several years, and copies of several years of tax returns. If you are self-employed, make sure that the 1099s you receive match the income reported on those tax returns.

Make sure that you have saved up for a substantial down payment. The days of the "no job, no income, no assets" loans are history. The lender will want to see how much you can put down. Some government programs may help to reduce the amount of the down payment required.

Pay down or, even better, pay off those credit cards. Review your credit reports from all three of the credit reporting agencies. You want an excellent credit score and no problems on your credit reports. If there are issues, then resolve them before making that loan application.

As a first time home buyer, remember that there will be costs for closing the home sale. Those include fees paid to the lender for making the loan, a title insurance policy, insurance covering the home. You'll need fire insurance, but sometimes flood as well, depending upon location, and fees paid for an escrow company or an attorney who prepares the closing documents. So, make sure you have money to cover the buyer's share of those closing costs.

There's nothing quite as exciting as being a first time home buyer, knowing that you can paint the walls whatever color you want, redo the kitchen and bathroom, and not worry about permission from the landlord. However, in order to achieve this, you need to be smart about how you make that happen. Take the time to do it right, don't rush. Soak up all this information so that down the road when you need a home loan refinance to accomplish all those renovations, you'll be an old hand.
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