by: Jason P Bertrand
It is much better to pay a home mortgage loan and build equity than it is to rent and pay someone else's home mortgage loan for them. By purchasing your own new home you are investing in your own future. The possibility of owning ones own home is easily within reach, if there is someone there to help. When buying your own new home there are many programs specifically tailored to meet your needs.
The US government insures many of these programs which in turn reduces the risk for a lender. Due to the reduction in risk lenders are extending more credit to first time buyers than ever before. In 2005 40% of home buyer's were able to finance their home mortgage loan with no cash down. This dramatic increase is due to government subsidized loans. Stop paying another persons loan and begin earning equity in your own home.
The best place to start is by getting a pre-approval. The best thing one can do is have a friendly experienced mortgage company to help you through the process. There are several steps that one should analyze as a first time buyer. All of these steps will help you in during your first home purchase and first home mortgage loan.
1. Get an idea of what you can afford
There are several factors, that when combined, will tell one what is affordable as a housing expense. It is best to contact a mortgage broker to help with the calculations. Some of the criteria include, but are not limited to: income, current expenses, credit, down payment, interest, job stability, payment history, loan rate, loan term and closing costs.
2. Know your rights
You should receive a copy of a Good Faith Estimate or GFE. You need to know what the fees are associated with the home loan and the total cost of interest to you. These are called the closing costs. Although getting a low rate loan is great, one has to realize that the closing costs have an effect on the annual percentage rate. The annual percentage rate is different than the interest rate. The annual percentage rate is a calculation that includes the interest and the closing costs. It is illegal to be discriminated against based on your sex, creed, race, age, sexual preference and several other issues. You are entitled to know why you were not approved for credit if that is the case.
3. Shop around
There are tens of thousands of lenders and brokers in the United States. Find someone you are comfortable with. A lot of people do not realize that when one goes to a lender they can only take advantage of a program that the specific lender offers. By utilizing a broker you are able to take advantage of the wholesale purchasing power of that broker. A broker can generally save money from what a lender would actually charge.
4. Understand the programs available to you
There are several government insured loans that can help to relax the requirements needed to get a home mortgage loan. Last year 40% of home buyers purchased their new home with no money down. This dispels the myth that one needs to put money down in order to purchase a home and get a home mortgage loan. FHA, VA, and HUD are three government insured loans.
5. Shop for a home
Find a Real Estate agent that you trust. Finding the right home is a very important process. There are more factors involved than the home itself. Look at the school systems, the emergency service personnel, and the town or city government. Make sure the home you pick is in the place you want to live as well. Make sure you look at more than one home. Even if your first impression of the first home you look at is "This is the one!" take a look at a few more just to make sure. This, for most people, is the biggest purchase they will make in their entire lives. Take your time and be sure about the right home.
6. Make an offer
When making an offer make sure everything is put in writing. What items you would like included. Things like curtains, blinds, fixtures, chandeliers. All of these things should be listed on the purchase agreement to make sure you are getting what you requested. Simply because you place an item on the purchase agreement does not mean the seller will agree to it. It does mean that it will at least get addressed and will be factored during the negotiation. Make sure you make the sale contingent on a home inspection and have everything put in writing.
7. Have a professional inspect the home
Hire a professional home inspector. The home inspector will go through the home and make sure the home is in good condition. Although a home may look beautiful from the outside, there could be some underlying issues that would change your opinion. The home inspector will make sure all of the mechanical and electrical systems are sound and will also make sure there is no damage from water, rodents or insects.
8. Shop for home owner's insurance
There are plenty of insurance companies out there. Just like auto insurance, the premiums can vary greatly between companies. Check several companies and make sure you are getting a good price for the coverage you need.
9. Close on your first new home
When closing on a home it is very important to read everything that you sign. It is important to get copies of the documentation prior to closing so you can go through them. You need to be able to address any concerns prior to the final signing date. If everything is in order, receive your keys, and move into your new home.
Copyright 2006 Jason P Bertrand