First Time Home Buyer Tips for Loan Process

First Time Home Buyer Tips for Loan Process:

Buying a home can be nerve-racking for first time home buyer because it takes time, afford and money. However, if you have some knowledge about it, it will help you navigate the process more smoothly and save money.

Getting a loan is a big step when you are buying a home so you need to get a preapproval letter first. Lenders gives mortgage based on your income (usually at least 2 years of employment required), total monthly debt obligation, your experience with credit history. When you apply for pre-approval letter for lender, the lender will able to say the approximate price range of homes to shop for. The lender will complete all necessary paperwork for loan approval and assist in the coordination of loan closing with your real estate professional and closing agent.

Also, you need to start saving for down payment and closing costs. Usually if you get conventional loan, you need to put 20% down but many lenders now permit much less and first-time home buyer programs allow you to as little as 3% down. There are other down payment options such as Federal Housing Administration loans (FHA) requires 3.5% and if you are veteran VA loans sometimes require no down payment at all.

Closing costs includes adding up all of the various fees and charges a homebuyer pays when taking a ownership of a home such as government fees, appraisal fee, taxes etc. Closing cost costs generally run between 2% and 5% of you loan amount. You can search as closing cost calculator online to see how much it could be based on your budget.

In Texas, there is My First Texas Home also provides down-payment/closing cost assistance to eligible homebuyers.

When you apply for a loan, check your mortgage options: lender usually offer 30-year fixed rate option but if you can afford larger monthly payment, you can get lower interest rate with 15 year fixed loan.

Don’t get a quote from one lender. Get at least three lenders to save you money on over the first five years of your loan.