Buying your own home is one of the pillars of the American dream. Like any other project, buying a home requires extensive preparation, especially when it comes to mortgages for the next 30 years. These tips for first-time homebuyers will help you navigate the process and get you the best rate and program available in the market at a given time.
First of all, it is important to understand the basic nuances of mortgage lending:
– Loyal attitude of the vast majority of lending institutions to borrowers. There is a program to stimulate the construction of residential real estate and increase the volume of mortgage lending. Therefore, you can count on the fact that lending institutions are often going along with you in reviewing applications and granting loans.
– Choice of the fixed-rate or adjustable-rate mortgage loan (FRM or ARM). Mortgage programs offered by lending institutes either have adjustable interest rates for 3 to 5-7 years, which vary depending on the quality of the borrower’s performance and the state of the national economy or the interest rate is fixed and, as there is no risk, is always 1-2% higher than the adjustable rate.
– Not only official income is taken into consideration, but also personal savings. All lending institutions consider not only official salary, but also additional incomes, pension, and bank savings, investments in securities, as well as dividends, and income from rents when reviewing a loan application.
Tips for first-time homebuyers to take out a mortgage and get the best rate:
– Save up for a down payment. The larger the down payment, the more likely the loan will be approved. Traditionally, financial lenders have been more willing to grant mortgages to borrowers who are able to make a 20% down payment on more favorable interest rate terms.
– Get all your legal documents in order. First and foremost, lending institutions pay attention to the availability of a legal and stable income. The best scenario is to be employed for at least two years in the same industry.
Meantime, you may be self-employed with solid revenues but lacked the supporting tax return to qualify for a good loan. LBC Mortgage may provide you alternative income programs or refinance your existing high-interest rate mortgages into a lower rate mortgage, saving you thousands of dollars every month and over the life of the loan.
– Establish a positive credit history. Take out several loans in advance and repay them on time. This will improve your credit score and allow you to get better terms from the lending institution. It would be good to pay off all your debts at least six months before you apply. If you are married, make sure that you both have a good credit history, since the bank will consider both profiles.
– Research the mortgage terms of several financial institutions. It is necessary to rely not only on the information published in official sources but also on the existing actual practice. It makes sense to contact professionals who will calculate the amounts and rates on an individual basis.
LBC Mortgage is always here to help you with this! Give us a call!