The shopping process, the credit checks, the documentation, the paperwork and so on can actually be daunting for first time home buyers. Andre Brooks, a regional manager for Wells Fargo Home Mortgage mentioned about the process as – “It’s far less complicated if you take the right steps in advance,” and added that “Before people start on this journey they should spend some time preparing. The lending requirements of 2012/2013 are different than [what was necessary in] 2005 and 2006.”
OBTAINING MORTGAGE FOR FIRST TIME HOME BUYING
It is not hard to obtain a home loan even if you are a first time home buyer. However, for that you will have to be aware of the process and the requirements of obtaining a mortgage. These are:
- You will be required to have a good credit score – In order to obtain a home loan, and mainly too for the first time, it is extremely important to have a good credit score. The better your credits core, the higher will be your chances of approval. The interest rate charged is going to be considerably low too.
- You need to have a low debt to income ratio – The debt to income ratio or the DTI is the measure of your income and the debt payments you make. If most of your income goes toward debt payments, you have high DTI. The higher the DTI, the higher is going to be the interest rate. So, it is very important to have a low DTI.
- Start preparing much before you apply – Start preparing for obtaining a mortgage before you can apply for one. This is going to help you in taking out a mortgage more easily.
- Give time to home loan shopping – You need to give time to shopping for the different home loans. You need to shop so that you can obtain the best loan as per your needs and affordability. There are so many types of loans and numerous lenders that you will be spoilt for choice.
- Do compare all of the offers – Compare amongst the different offers you are getting on the home loans. One is going to differ from another with regards to the total cost and the interest rate the loan term, and all of the other terms and conditions.
- Get pre-approval done – It is better to get pre-approved for a loan so that you know if you can actually get a loan. This also helps in quickening the whole process.
In addition to the above you should also make sure that you collect all of the required documents so that you can provide these, as and when required on an immediate basis.