The idea of starting a new chapter of your life as you buy your first home is exciting. However, the idea of actually getting your first mortgage may not seem as exciting; on the contrary, it can even be overwhelming and terrifying for some.
It is normal to be anxious about an endeavor that you are tackling for the first time. While it can be challenging to navigate the application process at the start, learning more about mortgages can help you prepare for this big move.
In the sections below, you will find # smart tips for first-time home buyers. These will help you get the details right and close a satisfying deal while saving as much money as possible.
1. Start With Your Credit Score
Before anything else, you should know your credit score. This can significantly impact the amount that you can afford as well as the amount of interest that you will end up paying for a new home.
That said, it’s best to not rush the homebuying process. Check your credit report first, and if you find that your FICO score is short of the score you need for the best deal, you have enough time and opportunity to do damage control.
2. Consider Getting an FHA Loan
If your credit history isn’t good enough to qualify you for a conventional mortgage, FHA mortgage is a smart alternative. It is issued by an FHA-approved lender and is designed for those whose qualifications don’t meet the standards of conventional lenders. This kind of mortgage can also be considered by low- to moderate-income borrowers.
While this can be a great option if you would not be able to qualify for a mortgage in any other way, it has its drawbacks, too. FHA loans can be significantly more expensive than conventional loans.
3. Don’t Max Out Your Budget
One smart practice when using credit cards is to not max out its limit. You should follow the same principle when it comes to mortgages. You may be qualified for a certain mortgage amount, but that does not necessarily mean that you have to max it out.
Don’t overextend yourself; instead, make sure that the payment fits your budget and won’t leave you living from paycheck to paycheck.
4. Gather More Options
You may think that the first mortgage offered to you is already good enough. However, to make sure that you’re getting a satisfying deal, it’s best to shop around for rates and study your choices carefully. Don’t settle with the first one presented to you. Rather, gather at least 4 options and examine the differences in their rates.
5. Don’t Use Your Credit For Other Purposes
After you apply for a mortgage, it’s best to not use your credit for other purchases and purposes until you close on the home.
This is because lenders take a look at your credit and compare it according to the time you applied against the time before closing. If a lender sees a new account, a higher debt balance, or any other significant difference, you can get disqualified for the mortgage.
To avoid issues and delays, leave your credit alone until you have the keys.
Buying a new home is a big move. It can be an exciting time for the family as a whole, but because there is a significant amount of money and obligation involved, it can also seem like a daunting task.
Nevertheless, you can prepare for this crucial new chapter of your life by reading up on mortgages in Los Angeles. Most importantly, you should partner with a reliable mortgage broker in the area to ensure a painless and pleasant application process.
If you’re a first-time buyer looking to apply for a mortgage loan in Los Angeles, CA, we want to lend you a hand! Lend LA is the premier mortgage broker for New American Funding. We offer a broad range of financing options with favorable rates to get your loan commitment as fast yet as precise as possible. Get in touch with us to get started!