If you're looking to purchase your first home, you probably have a lot of questions about getting a mortgage. You will need to figure out what type of mortgage you want and how much money you will be able to get. There are federal programs in place that are designed to help first-time homebuyers get a mortgage with better terms than traditional mortgages. Below we will discuss how to get you in the best position possible to get a mortgage that has reasonable terms for a person in your situation.
Who will be used to qualify for your mortgage?
Will it just be you being used to qualify for your mortgage, or will another family member be included? This decision will be based on the income and credit score of each person. If you decide to have someone else added to qualify for your mortgage, you should know that their credit score will be considered as well. If they don't have good credit, it is best not to use them as a qualifier.
How much can you afford for a down payment?
The more you can afford to pay for a down payment, the less your monthly payments will be. You will also be able to qualify for a higher mortgage amount. If you can afford to, put down as much money on your home as possible.
Do you want a 15 or 30-year mortgage?
If you choose to get a 30-year mortgage, your monthly payments will be lower than if you got a 15-year mortgage. However, with a 15-year mortgage, your home will be paid off in half the time.
Do you have good credit?
The better your credit score is, the lower your interest rates will be. Your debt-to-income ratio will also be considered, so it's best to keep that as low as possible. Monthly payments for vehicles and credit cards will lower the amount you qualify for, so it's best to pay those down if you can.
Are you interested in a federal mortgage program?
Federal mortgage programs, such as FHA and USDA loans, are helpful for first-time homebuyers. FHA loans are specifically designed for people who are purchasing their first home. They only require a small down payment, and you only need a 580 credit score to qualify. USDA loans are designed for people buying homes in rural areas, and they require no down payment. However, you will typically need a 640 credit score for USDA mortgages.
For more information, contact a mortgage service in your area.