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6 Mortgage “Must-Do’s” for First-Time Homebuyers

6 Mortgage “Must-Do’s” for First-Time Homebuyers

The mortgage process can be intimidating, overwhelming and frustrating for first-time homebuyers. However, if you take the right steps in advance, the process is far less complicated. Preparation is a key aspect to the mortgage process that every first-time homebuyer should be aware of.

Here are 6 mortgage must-do tips that will help first-time homebuyers avoid confusion in the mortgage process:

1. Get the ball rolling
Many mortgage experts recommend that buyers start preparing six months to a year before they begin looking at the market for houses. This gives buyers time to resolve any credit issues, reduce debt obligations and save to acquire enough money for a down payment. Having your finances in order ahead of time will help make the process easier, ensuring that there won’t be any unexpected financial problems while shopping for a home.

2. Look at your budget
In order to start the mortgage process it is essential to look at your budget and determine how a house fits into it. It is important that you don’t have any debt when applying for a loan. Your financial standing is crucial. It is also helpful to make a homeowner plan, calculating what you are willing to pay for a down payment, monthly on a home and closing cost. This will help you get organized and make the mortgage process easier for you and your lender.

3. Examine your credit
Credit is VERY important when considering buying a home. A blemished credit or inability to make a substantial down payment can put a halt to all of your homeowner plans. It is crucial to look at your credit early in the home-buying process and make sure you are in good standing to buy a home. Get an annual credit report and review that there aren’t any errors or unresolved issues. If you find an error, contact the credit reporting bureau to make sure the errors get resolved and corrected. It is also important to check your FICO score, which is the best-known and most widely used credit score in the United States.

4. Get pre-approved
Before you start shopping, it is important to find a mortgage broker you feel comfortable with. Ask your friends and family for their recommendations and look around until you find the perfect match. Once you have secured a lender, the next step is to get preapproved. A preapproval letter shows that the lender has evaluated your financial standing and credit and has determined the appropriate loan amount to lend you. This letter will put you in a stronger position to make an offer.

5. Be prepared
It is important to be prepared and ready to give your lender all of the information he or she needs. Lenders require a lot of documentation when issuing a mortgage. Knowing what documentation your lender needs ahead of time and bringing it to the initial meeting will avoid a delay in the process.

6. Plan for closing cost
First-time homebuyers need to be prepared for closing costs associated with a mortgage that aren’t apart of the down payment. The costs will vary from state to state, but there will be costs associated with generating and processing a loan. Be prepared for these costs.

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