Buying Your First Home? Follow These Finance-Related Tips
Buying a home for the very first time can be a nerve-wracking experience. Having not gone through the process, everything is new and unexpected, especially when it comes to securing financing. Here are some things to know about getting a mortgage.
Get A Mortgage Pre-Approval
The first step of home financing is getting pre-approved for a loan. However, many people put off this step of the process because they have heard that pre-approval letters expire. That is not a valid excuse to avoid having this part of the process done. While the offer does expire after two to three months, getting a new pre-approval letter is simple. Just meet with a loan officer with your lender and verify your financial information again.
If you are buying a home in a competitive offer situation, sellers look for reasons to disqualify buyers. One way they may eliminate offers is by not accepting any offer that does not come with a pre-approval letter. This is because a pre-approval is your way of telling the buyer that a qualified lender is willing to give you enough money to buy their home.
Without the pre-approval letter, the seller could be wasting time on an offer that will not get their mortgage approved. If you think that you can get pre-approved quickly if you find a home you like, know that it can take several days to get pre-approved, and by that time the sellers may have accepted another offer. That's why you are better off having the pre-approval when you start browsing for homes.
Save Up For A 20% Down Payment
Do you have a lot of money saved up for a down payment? If so, you may be wondering how much you really need to put down on a home. You can expect to see some benefits by making a down payment of at least 20% of the home's value, so if you are close to having the cash on hand to do so, consider saving up to reach that percentage threshold.
There are a couple of benefits to having a 20% down payment. The main one is that you will not have to pay private mortgage insurance, also known as PMI. It's an additional premium you pay on top of your mortgage, which is used to cover risky buyers that have less than a 20% down payment. Putting down that much cash also can qualify you for a better interest rate, which saves you money over the life of the loan.
Contact a company like Cornerstone Residential Mortgage for more information and assistance.