If you’re thinking of buying your first home by getting a mortgage, it’s best to do your homework to avoid costly mistakes and hurdles in the future. Being prepared can set you up for success by helping you navigate the whole process easier.
Housing loan experts from Wasatch Peaks Credit Union in Ogden, Utah shares a few tips and tricks you should know as a first-time homebuyer:
Know how much you’re willing to spend.
Home affordability calculators can help determine the amount of house you can afford by supplying details about your income, debts, and down payment. Note that while you may qualify for a larger loan, you should carefully consider how much you’re willing to spend on monthly payments. Following the 50/20/30 (50% of income on recurring expenses, 20% on savings, and 30% on flexible spending) is advisable to avoid becoming “house poor.”
Choose a reliable lender.
A new home is likely one of the largest purchases you’ll make in your lifetime. This makes it important to choose the right lender who will help you navigate the entire process. The right one will educate you about your options and make recommendations on which loan programs suit you best. Be wary of those who claim to give you the best rates with extremely lenient qualifications.
Collect necessary documentation.
You can speed up the process by digging up the necessary documents before the application. It’s also advisable to get pre-approved before you start searching for homes, as this indicates sellers that you’re serious about your offer.
Here’s a list of the paperwork you need:
- Proof of income (W-forms in the last two years and pay stubs)
- Assets (bank statements, investment accounts)
- Information on debts such as auto loans, credit cards, and student loans
- If self-employed, tax returns and profit and loss statement
- Child support/alimony if applicable
Work with an experienced real estate agent.
An experienced agent who is familiar with all the surrounding areas can give you an advantage when searching for homes in your desired neighborhood. He or she can also help you understand the process, determine the unnoticed upsides and downsides of the property, and negotiate better terms in a sales contract.
Apart from these tips, you should also learn to take your time in deciding which property to buy. Make sure that you’re making a well-thought-out decision or something that you will comfortable for the years to come.