There are a number of questions that you should ask yourself before investing time and energy in applying for a home loan. First-time home-buyers typically pick out their houses before ironing out their financial background. The first point of contact should be to your loan officer. But before even doing that, it’s a good idea to sit down and do some hard thinking. Before applying for your first time home loan, ask yourself a few questions.
What is the Benefit of Purchasing a Home Instead of Renting One?
Purchasing a home is an investment. When you rent a home, you are essentially paying someone else to live in his or her quarters. When you purchase and own your own home, you can deduct mortgage costs from your federal income taxes, with some states allowing you to also deduct mortgage loan interest from your state taxes. This will allow you to save money each year. Usually, the value of a home will also increase over time.
I Have Less than Perfect Credit; Do I Have a Chance of Purchasing a Home?
The criteria for obtaining a home loan are more stringent than ever before. The recession and the home buying market have created a crunch for many first-time home-buyers, but you may still be able to secure a home if you are a good candidate for any of the federal mortgage programs offered by the government. The FHA Back to Work Program is available for both returning and new home-buyers. You can also contact your local government to see if there are any local home buying programs that caters to the community.
How Much Home Can I Actually Afford?
It may be a bit hard to figure out how much you can actually afford. The best ratio is to have approximately one fourth of your income going toward the payments of your home. However, not everyone may have this luxury. Anything between 25 and 35% is typically okay for most loan criteria. However, if more than 35% of your income is required to pay off any house payments, you might want to rethink your target price to ensure you are able to maintain payments on a new home. Putting a sizable down payment on your first home loan has several benefits as well. You will enjoy lower monthly costs since you paid a portion of the home loan in the beginning and you become a more attractive candidate for a loan since you have shown good financial responsibility in your past.
To learn how you can secure your first home loan, contact us. We pride ourselves on helping new home-buyersnavigate the home loan process with integrity and honestly. Having a loan officer at your side that you trust is so important in this process and we will make sure you have the confidence that we will always put your first.