Unless you have hundreds of thousands of dollars in the bank to make a cash purchase, most home buyers can’t afford to buy their homes using their savings; they’ll need to borrow the money to buy a home, which is why they choose to take out a home mortgage. Sometimes, getting sufficient financing for buying a home can be complicated and time-consuming, particularly for first-time home buyers.
Here are some tips to help you finance your home purchase.
There are Benefits to Having a Mortgage
Although having a home mortgage means that you’ll be paying interest for years to come, you can count on collecting all of the benefits of home ownership without having to wait that long. The biggest benefit: deducting the interest you pay on that mortgage loan from your income taxes. Consult a tax professional for expert advice on this and how it will impact your taxes.
Good Credit Matters
Actually, good credit is critically important. You usually need a credit score of at least 660 to be qualified by a lender for a home mortgage. However, even if your credit score is already 660 or higher, you want to raise it as much as you can before you take out a home mortgage because higher credit scores mean lower interest rates and better loan conditions.
If you’re unsure how to raise your credit score, it should come as a relief to learn that it may be as simple as using credit, making payments on time, and keeping outstanding balances low (though be warned that raising your credit score takes time). That means you have to be extremely diligent about paying your bills on time, EVERY time. A good lender will give you the best counsel on what specifically you need to do in this situation.
Savings Will Only Help
On a related note, you should save up as much as possible before you take out a home mortgage. In part, this is because a smaller principal means a better chance of getting the home mortgage. However, it should also be mentioned a smaller principal means that much less interest that will have to be paid out over the loan term.
If you want the best deal, you can shop around for mortgage lenders, which can be a complicated and time-consuming process itself. You may want to consult a home mortgage broker, who can direct you to the right home mortgage lenders based on your needs and circumstances. Better still, home mortgage brokers are knowledgeable about their chosen field of expertise, meaning that you should not hesitate to ask questions. For example, you should check to see if you are qualified for special home mortgages such as FHA loans and VA loans.
We Can Help
Because we work with so many mortgage lenders every week on home sales transactions, we have the skills and experience to guide you through the entire home buying process. Call or email us today to get the process started.