Evaluate your credit report.
Look for mistakes in data, inaccurate records and dollar amounts. Be sure to check the small details – the lenders look at everything. Scan every word and number so you can see if there are any issues or inconsistencies. For example, you may be surprised to find relatives on your credit report or possibly you have someone that is still a joint holder of a bank account. You will want to clean up any of these issues before you start the home purchasing process.
Look for credit cards that you no longer use. You might want to close some, but keep in mind that lenders like to see long-standing credit relationships. Consider keeping your oldest credit card open, even if you are not currently using it. Having too many lines of open credit can be viewed as a negative value on your credit report. With this in mind, consider closing newer credit cards, which aren't in use.
Carefully select your mortgage lender.
Consider interviewing multiple lenders, to aid in selecting which one you will use. Remember, you'll be establishing a long-term relationship with that lender. Check for references and check with the Better Business Bureau to verify that the lender is reputable. Make sure that you are comfortable with that potential partner.
Keep in mind that a lender might try to tempt you with a slightly lower interest rate. This is especially common with Internet based lenders. Keep in mind the whole picture, a low interest rate is only one factor to consider. Be sure to calculate the entire cost of the loan, not just the monthly cost. What will the mortgage cost you over twenty years?
You want your mortgage lender to be available to answer any questions you may have. The lender can provide you financing options and help you determine what you will be able to afford. In addition, the lender can help you review your credit report and give you advice on how to improve it, if needed.
Compile a list of needs and wants in your life.
This includes the home (backyard, two bedroom, etc.), the lender (flexibility, established, good references), your life goals and ambitions. Where do you want to be (in your life) in twenty years? Do you want children, college expenses, etc.? All of these types of decisions will have some effect upon the decision of purchasing a property and how you will finance that property.
It is easy to desire every possible home option, but the reality is you will have to work within a budget. Before looking at houses, determine what you really need and which things you could live without. Consider things like number of bedrooms, number of bathrooms, lot size, neighborhood, school system, commute time, and proximity to shopping and restaurants.
At 1st Alliance Lending, we work closely with first time homebuyers. We help them through every step of the home buying process. We want to be your trusted partner. Contact us to learn more about purchasing your first home.
