It can be quite nerve-racking when you are planning on purchasing a house especially if you are a first-time home buyer. That’s pretty normal.
To help a first time home buyer Houston TX like you, we have listed a few tips so you can save money, avoid mistakes and navigate the process of buying a house easier.
Let’s dive in.
Save for a Down Payment Earlier
It’s pretty common to put down about 20%. However, some lenders may allow lesser than 20%. But, it is essential that you should know that lower than 20% down will mean you might have to pay for private mortgage insurance and higher costs.
So if you are planning on buying a house, it’s best to start saving early. You can set aside your work bonuses and tax refunds. You can also download some tracking apps to check your progress or set up an automatic savings plan.
Explore Your Options
When it comes to mortgage and down payments, there are a lot of options you can choose from. If you are having a hard time saving for a down payment, you can select from Veterans Affairs loans, Federal Housing Administration loans or Conventional mortgages.
You should also know that the amount you are putting down will affect your interest rate and monthly mortgage payment. Choose a 30-year fixed mortgage if you want to have the smallest mortgage payment. If you have enough money to pay for large monthly payments, choose a 15-year or 20-year fixed loan.
Research Any Local and State Assistance Programs
For first-time home buyers, there are a lot of states that provide assistance programs with benefits of closing cost assistance, down payment assistance, discounted interest rates and tax credits. Check if your area has first-time home buyer programs.
Know How Much You Can Afford
Before you go and buy a home, you should know how much you can afford. This way, you can still live within your means and buy a house, at the same time. Nothing is worse than getting your dream house but being unable to afford to live in it.
Check Your Credit History
It is essential that you check your credit score when applying for a mortgage loan. It is one of the essential factors in getting approved. It will help you determine the loan terms and interest rate of your loan.
As such, it is quite vital that you check your credit before planning on buying a house. If you have a low credit score, you need to recheck your history for any errors if there are any and dispute these to increase your score.
Compare Mortgage Rates
A lot of buyers only get a quote from one lender. If you are looking to buy a house, you should at least compare mortgage rates from a minimum of three lenders.
Get Pre-qualified for a Mortgage
Get an estimate of how much your lender can lend you based on your debts and income by getting yourself pre-qualified for a mortgage. However, when buying a house, get a preapproval letter where the lender can confirm in writing how much he or she can lend you after checking your finances.