by Dan Wolf
on Monday, July 7th, 2014 at 5:44am.
If you a first time home buyer you may have questions about the mortgage process. Consider these tips to help you understand what to expect and how best to proceed.
Pre-Approval It is recommended you get pre-approved before you start your home search. You will want to know how much house you can afford before you start looking. This will narrow down your search making it more manageable. In addition, by only looking at houses within your pre-approved price range you won't fall in love with a house you can't afford.
Think Long Term In many cases the lender pre-approves you for a higher amount than you can afford comfortably. You will have additional expenses associated with the new house such as taxes, insurance and home improvements. You may want to have some money available for furnishings and landscaping. If you maximize the amount you are spending on your monthly mortgage payments, you won't have the extra money needed to cover these additional expenses. Also consider planned future expenses. Are you intending to buy a car in the future? If you anticipate having children you will need to consider daycare costs or reducing family income so one parent is at home with the children. The lender will not be aware of any of these future expenses so it is important you keep them in mind. Consider looking for homes lower than your pre-approved mortgage amount to accommodate your future spending plans.
Evaluate House Options Before looking at homes sit down and decide what features are important and which are not a high priority. Work with your realtor to find homes in your price range that include the features you desire. Visit the homes and take a close look to verify the condition of the home is good. Envision yourself living in the home. Once you have found a home that meets your criteria, is in good condition, and you can envision yourself living in, work with your realtor to make an offer.
Evaluate the Mortgage Options Once your offer is accepted it is time to finalize the mortgage details. You will likely be presented multiple mortgage options by the lender. The length of the loan may vary and typically is between 15 and 30 years. The longer the loan the higher the interest rate offered but the lower the monthly mortgage payment. In addition, typically two types of loans are available: adjustable rate mortgage or fixed rate mortgage. Make sure you understand the details of the loans you are being offered. An adjustable rate mortgage may currently have a lower monthly payment than the fixed rate but be sure to understand what will happen to the payment long term. Often people who plan to stay in a home for many years prefer the predictable mortgage payments of a fixed rate mortgage. If you will be moving again in 5 years an adjustable rate mortgage may be the appropriate choice. Select the mortgage that is best for your personal situation and that you will be able to afford today and lon g term.
Buying a home is exciting but can also feel overwhelming as you are making a long term commitment. The right professionals providing excellent service can significantly reduce the stress. Contact us if you are in the market for a home!