subject: First Time Home Buyers Guide To Obtaining A Mortgage [print this page] First Time Home Buyers Guide To Obtaining A Mortgage
Home buyers hear it all the time: the mortgage industry isn't what is used to be. For all intents and purposes, this is true. In fact, if you want to obtain a home loan, you must be financially prepared, which means putting your proverbial monetary ducks in order. First-time buyers may be shocked to hear that mortgage lenders are now turning down individuals for home loans who would have easily snagged a home loan - and a competitive interest rate - just a few years ago. However, as we are all too aware, the home loan industry, has gone through major changes since the near-breakdown of the financial system just a couple years ago. First-time buyers need to remember that preparation is key when it comes to obtaining a home loan. With that said, there are several steps you should enact to do to prepare for your time in front of a home loan lender. Order a Copy of Your Credit Report If you are purchasing your first home with a spouse, order a copy of both credit reports and study them with the utmost care. Don't forget to order a copy of your credit report from all three credit reporting agencies (TransUnion, Experian and Equifax), as each agency could have conflicting information regarding your credit report. It has been shown in studies that many people have errors or discrepancies on their credit reports - errors that could mean the difference between a competitive interest rate and a steep one, or even more drastically, the difference between being accepted or rejected for a home loan. Any errors you find should be reported immediately to the appropriate credit monitoring agency so that they can be amended before you apply for a home loan. Don't Change Jobs or Make any Large Purchases There are two major facets a home loan lender will look for regarding first time buyers: employment history and income-to-debt ratio. Showing your lender your steady employment history is crucial, as it will prove your ability to repay the loan with consistent employment. Your income-to-debt ratio is also important, as it will provide the lender with important information about whether you can afford to take on more debt. Due to these two tremendous factors, it is important not to make any large purchases or career changes in the months leading up to applying for a home loan. Pay Down Debts
Once again, first time buyers must take into consideration their income-to-debt ratio, so take care to pay down as many debts as possible before applying for a home loan. Save, Save and Save Some More Those no-money-down home loans of just a few years ago are a distant memory now. In fact, as a first time buyer, you are expected to come to the table with at least 20 percent down for your new home. Although this amount will vary between lenders, you nonetheless must have a strong down payment in order to be considered for a home loan. In conclusion, first time buyers certainly have more challenges than ever, but the thrill of owning a home is still within reach. Take the time to make sure your credit and your finances are up to par so that you, too, can be a proud first time homebuyer!
