| Buying your first home? Not sure what the | | | | difficult, you can also save yourself a lot of |
| difference is between a variable rate and a fixed | | | | unnecessary headaches. Essentially, you apply to |
| rate mortgage? Do you understand the true cost | | | | the bank for a potential mortgage up to a certain |
| of borrowing? Keep reading for 7 invaluable | | | | amount. From there, you have a clear idea of |
| mortgage tips that are critical for any first time | | | | your budget as you search for houses, and you |
| home buyer. | | | | can consequently make an offer that won't be |
| 1. The bigger the down payment, the better. | | | | dependent on potential financing. |
| The lower your down payment, the more you're | | | | 5. Investigate FHA loans. |
| going to pay. With a 5 percent down payment, | | | | The Federal Housing Administration (FHA) offers |
| for example, you'll be expected to pay for | | | | free loan insurance to qualified buyers with a |
| mortgage insurance and will most likely be subject | | | | minimum 3 percent down payment. This insurance |
| to higher interest rates. Most lenders like to see a | | | | means you can get a better rate from lenders |
| down payment of at least 10-20 percent. | | | | without having to pay for outside mortgage |
| 2. Good credit will save you money. | | | | insurance. Typically, the FHA sets maximum limits |
| Lenders base your interest rate and your | | | | that depend on your county and region, but are |
| subsequent cost of borrowing heavily on your | | | | based on the median house price for that area. |
| credit rating. If your credit is poor, you may be | | | | 6. Budget for home insurance and property taxes. |
| advised to wait a few years while you build your | | | | No lender will mortgage a home that has tax liens |
| credit back up. The amount you save with a | | | | on it or isn't properly insured. When laying out |
| lower interest rate after rebuilding your credit | | | | your home ownership budget, always remember |
| could be tens of thousands of dollars over the life | | | | to calculate a monthly cost for county property |
| of the loan. | | | | taxes and home insurance. |
| 3. Remember the closing costs. | | | | 7. Choose a reputable lender. |
| Every mortgage has hidden costs associated with | | | | Don't just accept the first mortgage offer you |
| it, from legal fees to home inspections to bank's | | | | receive. Instead, look for a lender that's stable, |
| closing costs. Before you commit to any | | | | reputable and able to offer you quality customer |
| mortgage, remember to ask about all the closing | | | | service. A lending institution is one you will likely be |
| costs. You don't want a $5000 surprise - much | | | | dealing with for 30 years, so finding one with a |
| less 10 times that amount! - on closing day. | | | | stable history and good reputation should be a |
| 4. Get pre-approved. | | | | high priority. |
| While pre-approval can sometimes be more | | | | |