One of the most important things for first-time home buyers to know is that they shouldn’t purchase a home prematurely. As a first-time home buyer, above all, be sure you’re ready to buy. Most mortgage loan terms are 15 or 30 years. Although you may not stay in your home for that long, buying a house is still a major commitment.
It can be tempting to jump right into hunting for the perfect house, particularly if this is your first time – and especially if you’re in a rush to move out of your parents’ house. However, it’s a good idea to get a mortgage preapproval before you begin comparing properties.
Now isn’t the time to open a new line of credit, like a credit card or a personal loan. When you apply for mortgage preapproval, lenders will pull your credit report. Lenders may also monitor your credit report to see if you have new debt.
If they find that you’ve taken out another loan or line of credit, your credit balance has increased or you’ve started to make late payments, it could risk your final approval.
With conventional loan down payments going as high as 20%, a down payment can be a big financial step for first-time homebuyers.
If you qualify as a first-time home buyer, you can benefit from several assistance programs that bring the range from 0% for VA loans to 3.5% for FHA loans. These programs provide down payment assistance loans and grants. However, if you have a down payment for at least 20% of the purchase price, you’ll be able to avoid private mortgage insurance (PMI) on a conventional loan.
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