First TimeHome Buyers

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Tips on
Down Payments
For a Mortgage

If you want to buy a home and receive a mortgage loan to pay for it, you are going to need to have a down payment of a specific amount of money. While many buyers will put around 20% of the cost of the home down as payment for it, most lenders are willing to accept a smaller down payment because they understand that first-time buyers may not have thousands of dollars to spend on a home in one day. In fact, if you join the first-time home buyer program, you may be able to put down a total of just 3% of the cost of your home.

It all depends on how much money you have saved and available to use on a down payment. It helps to put a higher percentage down if possible, but even if it is not possible, you can still put down less and work something out with the mortgage company that is providing you with the loan. There are even some down payment calculators that will help you get a better idea of how much you should have saved up before purchasing a home of your own.

Be Aware
of All Your
Options

Did you know there are plenty of different options out there? Different mortgage companies will make different offers, some of which are simply better than others. You need to look at what is out there and compare the advantages and disadvantages of the options that are offered to you. For example, you may only need 3% of the total cost of the home to use as a down payment when you are receiving one of the conventional mortgage loans.

FHA offers loans to first-time home buyers, too. FHA typically allows individuals to put down 3.5% of the total cost of the home as an initial down payment. There are even Veteran Affairs options where individuals do not need to have a down payment at all. However, you should know that the total amount of money used as a down payment will have an impact on the mortgage you are going to pay each month.

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Check out
the Different Rates
and Make Some
Comparisons

If you have received a rate quote that you believe is ideal, you may be ready to apply specifically with that mortgage lender. However, you should always get rate quotes from other companies. Then you compare what they are offering and then choose the best deal possible to save even more money.

Tips on
Applying For a
Mortgage

If you are going to complete an application for a mortgage loan, there are some things you definitely need to know. The first thing you need to figure out is how much money you will be able to spend on a home based on what you earn. If you are not sure how to figure out this type of information, you can use a home affordability calculation tool that is easy to use. The calculation tool gives you an even better idea as to how much money you should be able to spend on a home of your choosing without struggling.

In addition to knowing how much money you can spend on a home, you need to make sure that you have fairly good credit. If your credit score is too low, you may not be approved for a mortgage loan. Some lenders do approve those with credit that is not so good, but the interest rates are often substantially higher, which means you will pay more than someone who has good credit. It is worth it to work on your credit and improve that score while you have the time to do so.

Work on
Getting
Pre-Approved

It may be easier for you to obtain a mortgage loan if the lender sends out a pre-approval letter. The letter will let you know that the company has reviewed your finances and debt to income ratio and has also approved you for a loan for a specific amount so that you can get the help you need to purchase a home that you want.

Tips For
Finding the
Right Home

When shopping around for the perfect home, you need to make sure you are working with a real estate agent who cares about you and wants to help you find your dream home. Make sure you and your agent see eye to eye to ensure that everything goes as smoothly as possible.

Once you have found the right agent to help you get started with the first-time home buying process, you need to start thinking about the type of home you would like to purchase and the specific kind of neighborhood you would want to live in. You could easily find the ideal home, but that does not mean it is going to be in a neighborhood that you want to live in, so always be prepared to do as much research as possible.

Check
Out the
Open Houses

Many real estate agents hold open house events for their clients. You should attend these events to take tours of different properties while searching for a home that is the perfect fit for you. During these tours, you will be able to see what the homes are like on the inside and find out whether they have been updated in recent years or not. It allows you to ask the real estate agent different questions about the property you are looking at.

Start
Saving For the
Closing Costs

Not only do you need to have a down payment when purchasing a home, but you also need to have the funds to cover the closing costs. These costs may be up to 5% of the total loan amount you are approved for, but the exact percentage will vary. There are different ways to reduce the amount of money spent on closing costs, such as attempting to negotiate with the real estate agent you have selected to help you find your dream home.

Be Prepared to
Cover the Cost
of Other Expenses

Do not forget about the expenses you are going to have after you move into the home. You may need to purchase blinds, curtains, furniture, and other essential items to put in different rooms throughout the property.

Take a
Chance to
Negotiate

Some people are afraid to try negotiating the cost of a home, but it does not hurt to make an attempt. What is the worse thing that could even happen if you were to attempt to save some money? You may be able to get the seller to pay for the cost of certain repairs that need to be made or something along those lines. Most sellers want to get rid of their properties quickly and are willing to do what it takes to make that happen, even if it means negotiating.

Obtain
Homeowners
Insurance

Prior to closing, you are going to need to obtain homeowners insurance. Be prepared to do research on the coverage you can receive from different insurance companies to protect your home if an emergency occurs, including different types of unexpected damages that can happen. Different companies offer different deals, so always read the fine print and find out what you can get in terms of coverage for your new place.

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Prodigy Lending is a DBA of AmCap Mortgage, Ltd. (NMLS ID# 129122 – www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/129122), an Equal Housing Lender.
Managing RMLO: Jason Turner (NMLS #286357)