This will help you target homes in your price range. This is where you meet with a loan officer, ideally a few at various mortgage companies.Įach mortgage lender (LendingTree is just one example) will scrutinize your financial background-such as your debt-to-income ratio and assets-and use this info to determine whether to loan you money, and what size monthly payment you can realistically afford.
Step 3: Get pre-approved for a mortgageĪnother one of the most important first-time home buyer steps? Seeking pre-approval from a lender for a home loan. Watch: 3 Things You Should Never Say When Buying a Home
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Here’s more on how to check your credit score and what number is best to buy a first home. So it’s essential to know your credit score, and take steps with those overextended credit cards and high-interest debts to bring your credit score up to snuff. If a lender sees some late payments on your credit cards or other blemishes in your credit report, this can lower your odds of getting a loan with a great interest rate, or perhaps even jeopardize your chances of getting any loan at all. In turn, the lender will use this info to decide whether or not to loan you money, as well as how much and at what interest rate. This three-digit number is a numerical summary of your credit report, a detailed document outlining how well you’ve paid off past debts like for credit cards and college student loans.Ī lender will check your score and report in order to estimate the odds that you will deliver your monthly payment, too. In addition to having a down payment, a first-time home buyer will need a decent credit score. Step 2: Check your credit scoreĭid you forget to pay off a couple of credit cards? Unfortunately, it’ll affect your credit score. A mortgage down payment can be as low as 10%, 5%, or even 0% for certain types of mortgages (e.g., VA loans or a USDA loan). Ideally a down payment on a mortgage should be 20% of the home’s price to avoid added fees, but if you don’t have that much of a down payment, don’t worry. However, in order to get a mortgage, you’ll need some sort of down payment. Buying a new home (particularly for the first time) requires a mortgage, where a lender fronts you the money and you pay it back over time.
One of the most important steps to buying a house for the first time? Figure out your finances.
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