First Time Buyer? 7 Things You Need To Know Before You Purchase A Home

Are you a first-time home buyer ready to get into the market? Between advice from friends or family, loans, closing costs and more, it can be overwhelming. Here are seven important things you need to know that can help alleviate your anxiety: 

Examine Your Credit

A poor credit score, or no established credit, can alter your home-ownership plans. Get a free credit report and read through it for errors. If you find any mistakes, contact the credit reporting bureau to ensure they are corrected. This can greatly affect the loan you may get. 

Collect Documentation

Gather pay stubs, W-2 forms, bank statements, filed income tax returns for the past two to three years, and any other documentation you may feel is necessary. Have them available to show to the lender. You may need to provide this paperwork to a few different people, so it's important to have them readily available. 

Pre-approval

Getting pre-approved for a mortgage is important when you are house hunting. Your current bank or local credit union, like Saginaw Medical Federal Credit Union, are good places to start your search. You can also search online to find lenders offering the best rates in your area. Applying to multiple lenders helps increase your chances of getting a loan approved at the best rate possible without having a negative impact on your credit score. 

Create Your budget

One of the most important steps is to establish your budget. It’s necessary to determine how much you plan to pay for your house. It is recommended that buyers spend no more than one third of their income on housing. Your monthly payment can also vary depending on how much you plan to use for a down payment. 

Find Out Closing Costs

Closing costs usually contain origination charges, settlement and title fees, taxes and items like homeowners' association fees and homeowners insurance. Sometimes, they are often higher than expected, so it's important to budget accordingly. 

Choose A Real Estate Agent

It is ideal to find and choose a real estate agent to assist you with the process. Utilize local ads or the internet to research and assemble a list of local agents and start finding out more about their experience. Look for realtors with a lot of experience, especially in the area and price range where you intend to buy. These realtors will be familiar with the current housing market and the history of the market in your preferred area, and they can help you distinguish between good and bad options.

Be Patient

First-time home buying is time-consuming and stressful. Many first-time home buyers become disheartened due to rising property prices and increasing interest rates. There's also chances that there may not be enough properties available that suit the buyers needs.

Taking important necessary steps before the home-buying process can save you time and money. It's important to do your research and talk to different professionals before you decide to make an offer on a home. These tips can help you to be prepared to buy your first home.

Related articles

• A Complete Guide to Refinancing Your Home Mortgage
• How to Differentiate the Rates
• Benefits Of VA Loans In GA
• Options for Down Payment Assistance

Why Refinancing your Home can be Beneficial to your Financial Health

When executed correctly, refinancing a home mortgage can save families significant amounts of money over many years by cutting sharply their interest expense. Of course, understanding if refinancing is the right path to take depends upon a borrower's specific situation. 

Generally speaking, refinance mortgage rates make sense when a family can reduce its interest costs enough to more than offset a new loan's settlement costs.

Closing Costs and Expenses

Refinancing a mortgage with an above market interest rate can yield instant benefits for your family's financial well-being. Refinancing too frequently or without consideration of associated settlement costs can have the opposite effect. 

Ideally, refinancing should be undertaken when it is abundantly clear that sufficient interest savings can be realized over the life of the loan. Other good reasons for refinancing include debt consolidation and the funding of important financial obligations such as a child's education or tax payments. 

These important things cannot be done by the average homeowner with most bank loans or credit products because the interest rates, terms and tax-treatment can never be so favorable.

Managing you Credit

If you are having problems with debt and bad credit, then this is another reason why you might want to refinance. However, this is kind of contingent upon whether or not you have been able to keep up on your mortgage payments. If you have, this helps improve your credit score. This might help you refinance into a loan with a much lower interest rates and decreased payments. 

Government Agency Mortgage Programs

Today, the U.S. government through the Department of Housing and Urban Development (HUD) provides the mortgage money market with significant amounts of liquidity with the goal of promoting home ownership. The government does this through two agencies, the FHA, and the VA (U.S. Department of Veterans Affairs). 

The mandate of the VA is to guarantee repayment of mortgage loans granted to U.S. service men and women. These loans are issued by qualified lenders such as Low VA Rates, one of the many lenders that active and retired members of the service rely on for VA home loan financing.

The Adjustable Rate Mortgage (ARM)

An adjustable rate mortgage may be exactly what your family needs if you plan to sell your house within in the next few years. ARM loans will commonly provide the borrower with a significantly lower start rate than what they currently have. 

If a new ARM loan's accumulated savings surpass the total closing costs by the time your house needs to sell, then refinancing with an ARM can be beneficial to your family's present financial position.

Fixed-Rate Mortgage

For some people refinancing into a fixed-rate mortgage is the better way to go. The reason for this, is that if you are already struggling financially, a fixed-rate mortgage takes away of any risk of your mortgage going up and making you more financially unstable. It will stay at the same rate the entire life of the mortgage.

Before refinancing your home, you must make sure that it is right for you. You only want to do it if it is actually going to save you money in the end. Refinancing without proper consideration of the long-term costs and effects can be an expensive mistake. 

So can cashing out home equity for the sake of financing consumer spending that does nothing to enhance one's personal balance sheet. On the other hand, saving tens of thousands of dollars over the life of a twenty or thirty-year loan by replacing it with a new loan makes all the sense in the world if it can be justified after examining the economics of the situation.

Looking Forward: Investments, Assets and Your Retirement

Planning for retirement is not something that should be put off to the last minute or after the company farewell party. There are many things to do shortly before you retire and some things you should start as soon as you enter the work force. It is not original, but it is never too early to start planning for your future.

Beginning At an Early Age

If you are just entering the work force and not making a whole lot of money, it is still not too early to get into the practice of savings. Decide to put five percent of your paycheck into savings. 

As your income grows, continue to save. Try not to touch it. This is the first step toward reaching the goal of having a comfortable and enjoyable retirement.

Take Advantage of Any Program Your Employer May Offer

If the company you work for offers a 401K plan, participate in it. Contribute as much as possible to the plan. Usually, there is an option of making taxable or tax deferred contributions. 

Tax deferred may give you a little more spending money when you first begin investing, but it is not going to be a big help regarding income taxes when you retire.

Open an IRA

The individual retirement account allows you to put a portion of your income in an account that will draw interest. The contributions are tax deferred. There is also the possibility of opening a Roth IRA. In this plan, the money you contribute is taxable. However, the money you earn will be tax-free when you withdraw it. 

Regardless of which plan you open, do not go to the nearest bank and take whatever fixed rate is being offered. Talk to a financial adviser or stockbroker and determine how the money can be invested to generate the best yield with a reasonable degree of security.

Looking Forward: Investments, Assets and Your Retirement

Planning for retirement is not something that should be put off to the last minute or after the company farewell party. 

There are many things to do shortly before you retire and some things you should start as soon as you enter the work force. It is not original, but it is never too early to start planning for your future.

Beginning At an Early Age

If you are just entering the work force and not making a whole lot of money, it is still not too early to get into the practice of savings. Decide to put five percent of your paycheck into savings. 

As your income grows, continue to save. Try not to touch it. This is the first step toward reaching the goal of having a comfortable and enjoyable retirement.

Take Advantage of Any Program Your Employer May Offer

If the company you work for offers a 401K plan, participate in it. Contribute as much as possible to the plan. Usually, there is an option of making taxable or tax deferred contributions. 

Tax deferred may give you a little more spending money when you first begin investing, but it is not going to be a big help regarding income taxes when you retire.

Open an IRA

The individual retirement account allows you to put a portion of your income in an account that will draw interest. The contributions are tax deferred. There is also the possibility of opening a Roth IRA. 

In this plan, the money you contribute is taxable. However, the money you earn will be tax-free when you withdraw it. Regardless of which plan you open, do not go to the nearest bank and take whatever fixed rate is being offered. 

Talk to a financial adviser or stockbroker and determine how the money can be invested to generate the best yield with a reasonable degree of security.

Buy Life Insurance

Term life insurance starts out cheap. However, the premium increases over time. If you outlive the term, you or survivors get nothing. If it was an employer's policy, and you change jobs, there will be no refund. 

You can buy a 20-year paid-up whole-life policy for a higher, but fixed, monthly premium. If married, purchase a policy for yourself and your spouse. If there is an early death, the benefits are tax-free and can cover funeral expenses and help with the mortgage payments.

Be Diligent

Check your investments at least every month. Talk to your financial adviser or broker to get their take on where the economy is heading. Do not invest all your funds in one stock or company. At any given time, some of your investments could be threatened by a change in the financial markets. It may be necessary to make some adjustments.

Simply stated, to plan for your future you have to invest money you are earning today. Social Security in some form will be around 40 years henceforth and probably longer. However, it will only cover a fraction of your expenses. Do not buy over your income. That BMW in the showroom looks great, but the Chevrolet will get you to work. 

Think about the things for which you are planning. Is it your own retirement? Are you saving for your children’s college education? Do you plan to move to an exotic island before you are 50? Prioritize and be reasonable in what you plan to do. Watch your investments. Communicate with your financial adviser on options that may develop. Do not depend on a company retirement plan. 

You may have several different jobs during your working career, and the retirement plan may not follow you. If a company pension comes your way, you are ahead of the game. However, if it disappears, you can still be in good financial shape if you start early in planning for the future.

Term life insurance starts out cheap. The premium increases over time. If you outlive the term, you or survivors get nothing. If it was an employer's policy, and you change jobs, there will be no refund. 

You can buy a 20-year paid-up whole-life policy for a higher, but fixed, monthly premium. If married, purchase a policy for yourself and your spouse. If there is an early death, the benefits are tax-free and can cover funeral expenses and help with the mortgage payments.

Be Diligent

Check your investments at least every month. Talk to your financial adviser or broker to get their take on where the economy is heading. 

At any given time, some of your investments could be threatened by a change in the financial markets. It may be necessary to make some adjustments.

Simply stated, to plan for your future you have to invest money you are earning today. A specialist from Pinnacle Financial Partners recommends taking a look at your financial assets as a whole to determine what they can offer for your future plans. 

Social Security in some form will be around 40 years henceforth and probably longer, however, it will only cover a fraction of your expenses.

Think about the things for which you are planning. Is it your own retirement? Are you saving for your children’s college education? Do you plan to move to an exotic island before you are 50? Prioritize and be reasonable in what you plan to do. 

Watch your investments. Communicate with your financial adviser on options that may develop. Do not depend on a company retirement plan. You may have several different jobs during your working career, and the retirement plan may not follow you. 

If a company pension comes your way, you are ahead of the game. However, if it disappears, you can still be in good financial shape if you start early in planning for the future.

Get Some Expert Help When Obtaining a Mortgage

Buying a house can be a very exciting time for you and your family, but trying to find ways to afford it can be stressful. It is vital to compare mortgage brokers so you will not only get the best service, but get an expert in this field. 

Great service includes putting you first; they don’t treat you as customer, but as a person. By being an expert, the mortgage broker will give you advice to help you when making critical financial decisions. 

Putting these two together, you want a mortgage broker who truly cares about you, but also has the expertise in the mortgage process. When choosing a mortgage broker, there are more things to consider such as the term, rates, and fees. 

Once you know everything, you are ready to choose a mortgage broker who will fit your lifestyle.

How to Choose a Mortgage Broker

There are many mortgage brokers out there, so the best way to choose one is through a referral. Ask any homeowner who their mortgage broker was, such as a friend, co-worker, or a family member. When asking your friend about their mortgage broker, find out about the customer service to see if they were treated fairly. 

If you want to go a little further, you can also ask your real estate agent for a referral. You don’t want to take their word for it, so ask questions about the broker’s experience, professionalism, and commitment. After talking to someone, you want to do further research by looking on their website and on any online reviews. After your research, interview a few mortgage brokers, and ask for references. 

It’s best to compare brokers, that way you can choose one that meets your needs. After this whole process is finished, you will develop a trusted relationship with your mortgage broker. 

Mortgage Broker Process

A mortgage broker is the “middle man” who works with you and a bank/mortgage lender to help you obtain a mortgage that fits your needs. A mortgage broker counsels you through the process of obtaining a mortgage and any problems that might occur, such as credit problems. 

When you meet the right broker, you will be asked to fill out an application with your financial information, which will then be put in a file that will be sent to the lender. After you finish filling out the paperwork, the mortgage broker will work with you to find the lowest rates available by looking up all the different banks/lenders. This is actually their greatest advantage. 

Once you are finished looking for a lender, the mortgage broker puts all your paperwork in a file and sends it off to the lender, who then gives you the loan. Having this type of professional makes everything much easier on you. It can be a stressful time in your life, but having this kind of help can make you treasure this milestone a bit more.

Rates

The interest rate is what the lender charges you to pay off your mortgage. There are two forms of interest rates: adjustable and fixed rates. An adjustable rate is when your interest rate will change over the course of your loan. 

When interest rates are low, adjustable rates are not the way to go because the rates are more likely to go up. The best time to have an adjustable rate is when the interest rates are high because it is more likely the interest rate will drop. A fixed rate, on the other hand, is when your interest rate stays the same each year. 

The best time to have a fixed rate is when the interest rate is low because you will have that same rate for the whole term of your loan, no matter what. Right now, a fixed rate is the best option because right now, the interest rate is low. When you meet with a mortgage broker, they will help you choose which option to have.

Term

The term is the period of time in which you are going to repay the loan. The most common terms are fifteen and thirty years. When having a fifteen-year fixed rate mortgage, the interest rate is a little lower, but the monthly payment is higher than having a thirty-year fixed rate mortgage. 

Having a fifteen-year fixed rate mortgage, you will pay off your mortgage by the time your children enter college, which is great because you will get this done sooner rather than later. When having a thirty-year fixed rate mortgage, the monthly payments are lower than fifteen years, which allows you to have extra money and invest in other things.

There are many other options to pay off your mortgage such as 10, 40, or 50. Your mortgage broker can help you determine what’s best for you.

Fees

There are two common ways that homeowners pay their mortgage broker. The most common way is through a loan origination fee. This is when your broker charges you a certain percentage, depending on your loan. 

Therefore, if you have a high loan amount, your mortgage broker will charge you a low percentage, but if you have a low loan amount, you will be charged a high percentage. If you don’t want to pay your broker this way, another common way is upfront. 

Instead of paying your mortgage broker over time, you pay them right there all at once. Homeowners who buy expensive homes go for this type of fee. There are other options, but these are the most common among homeowners.

There are many aspects to obtaining a mortgage, and these aspects can be stressful. When this happens, it is a great idea to get a mortgage broker because they will help you with this long, stressful process. 

Be sure to weigh your options when it comes to a broker, in order to find the best service possible. To secure a mortgage, know all about the rates, terms, and fees. If you experience any questions, you always have that professional there to help you with everything.