It’s springtime in Rochester and the home buying season is upon us! If you are thinking of buying your first home, you will need a pre-approval letter from your lender. Before you contact your lender, there are six things you can do to put yourself in prime position to buy.
- Determine your credit score. Your first goal should be to raise your score as high as you can so that you can get the best interest rate possible on the mortgage. If you have not formally established credit, obtain these three things: a major credit card (pay the balance off monthly so you will never incur interest, which keeps your score higher); a line of credit attached to your checking or savings account; and a store credit card (choose one where you shop frequently and pay the balance in full each month).
- Tackle your credit card balance(s). If your credit has already been established and you carry balances on any of your credit cards, pay down as much as you can before applying for your mortgage.
- Do not add any additional debt. In addition, do not let your accounts fall behind. This will only hurt your credit.
- Determine where you would like to buy a home. By determining the average selling price of the homes in the towns in which you are interested in living, you will have a basis for determining the amount of money you will need to borrow.
- Investigate the tax rates for the town(s) or city where you are interested in living. If you are a first-time homebuyer with less than 20 percent to put down as a deposit, your lender will require you to escrow your taxes, as well as your homeowner’s insurance and private mortgage insurance. Having an idea of the monthly amounts for the real property taxes, as well as quotes for homeowner’s insurance, can help give you an idea of how much you will pay for these items each month.
- Start saving. The most important thing you can do is save money for your down payment and other expenses. The more money you put down, the less your monthly mortgage payment will be. First-time homebuyers should also look into a program called the First Time Home Buyers Grant where every dollar saved is matched by four dollars. It’s offered by certain lenders, including Family First and a few other financial institutions in the Rochester area.
This article was written by one of our Mortgage Officers at Family First. Contact the Mortgage Department today at 585.586.8225 if you have questions about buying your first home or would like to start the mortgage process!