Getting a Home Loan is Just as Important as the House
written by First Colony Mortgage
Buying a new home can be stressful. You want to make sure you choose a great house that will fit the needs of you and your family, but not spend more than you can reasonably afford. Have you found the perfect home or floorplan? How will you pay for it? What other mortgage and financing factors should you know before deciding which home to buy or build? Here are some tips:
Get Pre-Qualified Before You Look
The very idea of looking for a home or picking out floorplans and custom options is exciting! But hold on, there is something you should do first. Talk to a mortgage professional before you start the hunt and get pre-qualified, it will help you know what kind of a price and payment you can afford so you don’t fall in love with something that may be just out of your reach. You wouldn’t want to be looking at a $400,000 home on a $300,000 budget. A mortgage professional can go over your specific financial situation to help you see what qualify for, and then it’s time to start looking.
Down Payments Determine Options
Have you been saving for a down payment? Will the sale of your current home help with it? The amount you put down will determine several factors with your home loan. If you have at least a 5% down payment there are several great loan options available to you, but they may require mortgage insurance. If you have 20% down, mortgage insurance isn’t necessary. There are also several low or even zero down payment options out there, depending on location, income, and more. Remember, the more money you can put down on the loan, the less you will have to borrow, and that will lower the payment.
Pick a Loan Type to Fit Your Needs
Just as people are different, so are different loan types and individual needs. There are many great home loan options for people out there like traditional conventional and FHA loans to Utah Housing, VA and rural housing loans too. Everything depends on your situation, down payment, credit score, location, income and more. In some situations, there may even be community grant programs to help with things like down payments and closing costs to those that qualify.
Be Careful with Credit
Your credit score helps determine what you may qualify for in a home loan, but that’s not the end. Building a home takes more time than buying existing, and so with the longer waiting period your home loan won’t be finalized until the home is finished. You need to maintain your credit score during that time. Don’t take on any new debt during the loan process. This could be anything like buying new furniture for your home on a credit card or financing a new car. Acquiring new debt will alter your debt ratios and can disrupt or compromise your mortgage. You don’t want to get to the end of construction and no longer qualify for the loan. If you have questions about this or anything else, talk to a mortgage professional and they will help you through it.