Get Ready Now to Become a 2013 First Time Home Buyer

Get Ready Now to Become a 2013 First Time Home Buyer Get Ready Now to Become a 2013 First Time Home Buyer

It may cost more to buy than to rent in the short term, so the first steps of becoming a first time home owner will require a significant outlay. In getting ready to buy a home, you should take an honest and critical look at your budget. You want to avoid getting in over your head and perhaps losing your home.

Look at your budget and see what you can cut out so that you can have enough to make your monthly mortgage payments. It’s also advisable to have the cushioning of savings that you can use to keep up with payments in case you lost your job or your income drops. Apart from this payment, there will be other costs like mortgage insurance and maintenance costs. You may have to compromise the exotic vacation for a nearby getaway or trim other non-essentials from your budget for a time. Take a test and see if you can do without your credit card for at least two weeks. You’ll be forced to think before you buy and you will have to stick to essentials. It will prepare you for the sacrifices you have to make to achieve the dream of owing your first house.

After the crash that came after the housing boom when lenders were quite liberal about whom they lend money to, they are now very vigilant. They will go over your application and supporting financial documents like your bank statements, tax returns and pay stubs with a very fine tooth comb. Your FICO score is also very important.

If you have one that is below the minimum score, you would do well to take steps to bring it up. If you come across windfalls like a bonus, a gift of cash or if you have an assets that you can liquidize like stocks and bonds, do so. Use the cash to offset liabilities that are lowering your credit score like credit card debt and student loans. Apart from improving your credit score, you will also reduce your liability before you take on the huge responsibility of a mortgage.

The biggest challenge that first time home buyers have is to raise the amount needed to put down a deposit on a home. This obstacle has been removed with first home buyers schemes that significantly reduce the deposit required or even bring it to zero. Some of these mortgage loan options are the FHA backed loans, VA loans for veterans, USDA mortgages for rural home buyers and first buyer loans from Fannie Mae and Freddie Mac. HUD programs are also available.

Do not just go with the mortgage that requires the least amount in deposit or that has the lowest interest rate. The different schemes are made to cater to people in different financial circumstances and with different aspirations of the home they wish to buy. Look at and understand the pros and cons of each then pick the mortgage that best suits your needs.

First time home buyers face a set of challenges that second home buyers or those seeking to refinance their homes do not. It would be best to deal with a lender or realtor who concentration is on first time buyers. They will have a good understanding of the options, programs and incentives that are available for you making them better placed to advice you accordingly. They will also know what is required such as by lenders and they will get you ready. If your FICO score is not high enough, they will advice you accordingly, go through your financials with you and help you to bring it up to the required level. They will also advice you on requirements like your tax returns, bank or income statements and pay stubs.

There is no time like the present and that certainly applies to anyone who has aspirations of owning a house in 2013. Now is the time to make a move while interest rates are still low and while it is still a buyers market. Home prices and values have been climbing up steadily and it is expected that the trend will continue in 2013 and beyond. This means you can still afford a better house in a better location before prices go up forcing you to perhaps compromise if you put the process off till later in the year.

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